Timor-Leste is a small nation located in Southeast Asia. It has a population of 1.3 million people and a GDP of $3.2 billion. The economy of Timor-Leste is largely dependent on oil and gas production, which accounts for around 90% of the country’s exports. The country also relies heavily on foreign aid, with the World Bank providing $1.2 billion in assistance since 2002. The unemployment rate in Timor-Leste is estimated to be around 20%, and the poverty rate is estimated to be around 40%. The country has seen some economic growth in recent years, with the GDP growing by an average of 4.5% between 2015 and 2019. The government has also implemented a number of reforms to improve the business environment, including reducing the corporate tax rate from 30% to 25%. These reforms have helped to attract foreign investment, with the total amount of foreign direct investment reaching $1.2 billion in 2019. Overall, Timor-Leste has seen some positive economic developments in recent years, but there is still much work to be done to improve the country’s economic situation.
In Timor-Leste, both corporate and personal taxation are regulated by the Taxation Law and its implementing regulations. The tax system is overseen by the Taxation General Directorate, which is responsible for tax collection and enforcement.
Corporate taxation in Timor-Leste is applied at a flat rate of 30% on taxable profits. Companies are required to file annual tax returns and make quarterly advance payments based on their estimated profits. Additionally, there are a number of other taxes and fees that companies may be subject to, including property taxes, social security contributions, and customs duties.
Personal taxation in Timor-Leste is applied on a progressive scale, ranging from 0% to 10% depending on the amount of income earned. The tax-free threshold is set at USD 1,500 per year. Individuals are required to file annual tax returns and make quarterly advance payments based on their estimated income.
Value Added Tax (VAT) is applied to most goods and services in Timor-Leste at a standard rate of 2%. However, there are exemptions and reduced rates that apply to certain goods and services. Businesses registered for VAT must file monthly VAT returns and make payments to the tax authorities by the 20th day of the following month.
The tax calendar in Timor-Leste runs from January 1st to December 31st of each year. The deadline for filing annual tax returns and making final tax payments is March 31st of the following year. However, companies and individuals are required to make quarterly advance payments throughout the year, with deadlines falling on the 15th day of the first month of each quarter.
It's important to note that tax laws and regulations in Timor-Leste can be complex, and it may be necessary to consult with a tax professional or legal expert to ensure compliance with Timor-Leste tax laws. Additionally, tax rates and regulations can vary depending on the industry and location, and it's important to check the local tax laws and regulations to ensure compliance.
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