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in 2015 compared to 2014.
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This rise is more modest than in previous years, but this is not because
of reduced domestic economic activity, lower tax rates or more inefficient tax administration.
Rather it is mainly because of lower revenue from rice sales and low inflation.
Excluding revenues from rice sales domestic revenue is growing by 5.6 from 2014 to
2015 which is more similar to the past increases. The reduction in revenue from rice sales is
due to a deliberate policy decision by the Government to scale back the rice subsidy program
due to improved rice supply in Timor‐Leste. These arguments are further discussed in
the following subsections which cover all components of domestic revenues; namely taxes,
fees charges, interest and autonomous agencies.
Table 2.6.2.1.1: Domestic Revenue 2013 – 2019 m
2013 Actual
2014 BB1
2015 Projection
2016 2017
2018 2019
Total Domestic Revenue
151.1 166.1
170.4 182.0
193.7 205.6
217.7
Taxes 104.8
120.0 125.5
134.4 143.5
152.6 161.9
Fees and Charges
24.1 41.2
37.2 39.6
42.0 44.4
46.9 Interest
0.1 0.2
0.0 0.0
0.0 0.0
0.0 Autonomous
Agencies 22.2
4.8 7.6
7.9 8.2
8.6 8.9
Source: National Directorate of Economic Policy
2.6.2.2: Taxes
In Timor‐Leste taxes comprised 69.3 of total domestic revenue in 2013. Taxes include
direct taxes, indirect taxes and other tax revenues and their projections are summarized in
Table 2.6.2.2.1.
As seen in Table 2.6.2.2.1, increases in tax collection are expected to continue, reaching
125.5 million in 2015 a 4.6 rise on the 2014 budget. The Government is striving to
promote higher tax collection and is considering various changes in the taxation system in
Timor ‐Leste towards this goal, including the signing of a convention with Portugal in July
2014 to improve tax administration.
Direct taxes are expected to increase by 1.1 in 2015 compared to the figure for the 2014
budget. This is mostly due to improved levels of compliance and also because of a
reclassification of the categories ‘Individual Income’ and ‘Individual Income Other’ applied
since 2014, in order to distinguish between civil servants and other workers more
accurately. In contrast, withholding and corporate taxes are expected to decrease compared
to the figures for the 2014 budget.
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Every effort has been made to make these forecasts as accurate as possible by using all available data,
considering past trends and consulting with relevant entities. However due to changing patterns in economic
growth, alterations in policies and the nature of forecasting, all figures presented should be approached with
caution.
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Indirect taxes are expected to increase in 2015 by 6.9 due to higher excise tax and import
duties. The increase in revenue from these taxes is a result of the rising purchasing power of
the population, imports of materials for large infrastructure projects and greater
compliance. These
rises counteract expected a slight reduction in service and sales tax for 2015 compared
to the 2014 budget figure. Collections of both these taxes are expected to be higher
than the actual collection in 2013. This upward trend is expected to continue in the future.
However the collection of these taxes ought to also continue improving in the near future
with the strengthening of the private sector and the administration mechanisms around it.
Table 2.6.2.2.1: Total Tax Revenue 2013 – 2019 m
2013 Actual
2014 BB1
2015 Projection
2016 2017
2018 2019
Total Tax
104.8 120.0
125.5 134.4
143.5 152.6
161.9 Direct
Taxes 40.2
45.1 45.7
