Guide G05 Income Tax – English Page 24 of 35
film dubbing
appraisal actuarial
architectural surveying
legal
automated data processing advertising
marketing secretarial
stevedoring
shipping and customs agent travel
agent storage and warehousing
The rate of tax applicable to amounts payable to non-residents without a permanent establishment
in East Timor is as follows: TYPE
OF INCOME
RATE all income
20
4.2. Annual Income Tax rates
For natural persons ie individuals - AMOUNT
OF INCOME
RATE 0 –3,368
10 in excess of 3,368 - 6,737
15 in excess of 6,737
30
For example , an individual with a taxable income of 5,000 would pay income
tax of 581.60 ie[3,368x10] + [1,632x15]
For any other person ie partnership, company or any other entity – 30
For example
, a company with a taxable income of 5,000 would pay income tax of 1,500 ie 5,000x30
5. MINIMUM INCOME TAX
For the 2002 income tax year and subsequent years, the law provides for the imposition of a minimum income tax on taxpayers conducting business activities.
The minimum income tax payable for a tax year is one percent 1 of the taxpayer’s total turnover for that year. The tax is payable even if the taxpayer has no taxable income for the year
ie there is a loss for the year.
Guide G05 Income Tax – English Page 25 of 35
“Turnover” has its ordinary meaning, namely the taxpayer’s total revenue from business activities without deduction for any expenses including the cost of inventory sold. Where a
taxpayer has disposed of a non-inventory asset in the tax year, total revenue includes the net gain from disposal of the asset. Total turnover does not include any amount derived by the taxpayer
that is subject to a final withholding tax. Taxpayers that conduct business activities are subject to both the ordinary income tax and to the
minimum income tax but will be required to pay, in effect, the higher of the two amounts. The ordinary income tax for the tax year is computed first. The amount of the ordinary income tax
payable for the year is credited against the minimum income tax payable for the year. If a taxpayer’s ordinary income tax liability for the year exceeds the taxpayer’s minimum income tax
liability, then the minimum income tax payable is reduced to zero. Where the minimum income tax liability for the year exceeds the ordinary income tax liability,
only the amount of the excess is payable. Any instalments of income tax paid by a taxpayer in a tax year in excess of the taxpayer’s ordinary income tax liability shall be credited against the
taxpayer’s minimum income tax liability for the year.
Example Suppose a taxpayer’s total turnover for a tax year is 100,000. The taxpayer has
a minimum income tax liability for the year of 1,000 1 x 100,000. Suppose further that the taxpayer also has an ordinary income tax liability of 1,200 on its
taxable income. The ordinary income tax liability is credited against the minimum income tax liability reducing it to zero. The taxpayer pays only the 1,200
ordinary income tax liability on its taxable income. If the taxpayer’s ordinary income tax liability for year is only 800, then this is
credited against the minimum income tax liability reducing it to 200. This amount is payable by the taxpayer in addition to the ordinary income tax
liability of 800.
6. ASSESSMENT 6.1. Self-assessment
