East Timor - Taxation

In 2000, UNTAET issued a "Revenue System for East Timor," providing the basis for a tax regime. It largely adopted the Indonesian Income Tax Law with some modifications. East Timor's tax system is designed to tax business profits and "designated passive" income. Business profits include capital gains. Passive income includes interest, royalties, and rental and dividend income. The standard income tax rates for resident companies and individuals are 10% on the first $3,368; 15% on the next $3,368; and 30% on income over $6,737.

Employment-related income initially was not subject to income tax; however, a "wage income tax" (WIT) was levied for wages received on or after 1 January 2001. WIT applies to employmentrelated remuneration only, as opposed to general personal income. WIT is due as follows: the rate is 0% on monthly salaries of $0 to $100; 10% on monthly salaries of $101 to $650; and 30% on monthly salaries of $651 or more.