Kiribati - Politics, government, and taxation

Kiribati is an independent republic and a member of the British Commonwealth. The president is head of state and chief executive, and leads a cabinet made up of a vice-president, attorney-general, and 8 ministers. The president appoints the ministers, while the president is elected nationally from several candidates nominated by the House of Assembly (Maneaba-ni-Maungatabu). The House of Assembly consists of 41 members, elected every 4 years. Local councils have considerable autonomy in the management of local affairs.

Kiribati is governed by a constitution adopted in 1979. The first general election since independence took place in March-April 1982. The current president is Teburoro Tito, who was first elected in 1994 and reelected in November 1998.

The Kiribati government aims to improve the growth performance of the country by encouraging new businesses and attracting new foreign companies through designation of "pioneer status." Any company that wishes to establish a business in Kiribati may apply to the Internal Revenue Board for "pioneer status". This allows for a reduced company tax rate of 10 percent for 5 years with the exceptions of business operations on South Tarawa and Christmas Islands. In addition, the government hopes to encourage diversification of the economy and is introducing reforms (such as privatization) to improve the efficiency of the economy.

There is personal income tax , which is set at 25 percent of gross income for the first US$36,000 and at 35 percent for amounts in excess of this. Normal company tax is based on a flat rate of 25 percent of net profit for the first US$36,000 and 35 percent for amounts above this. Tax on dividends paid to overseas investors is 30 percent, except for dividends paid to an Australian resident, where the rate is 15 percent.

Because of the high population density on South Tarawa was giving rise to social and economic problems, it was announced in 1988 that nearly 5,000 inhabitants were to be resettled on outlying atolls, mainly in the Line Islands. A further resettlement program from South Tarawa to 5 islands in the Phoenix group was initiated in 1995. Another important issue is a 1989 UN report on the "greenhouse effect" (the heating of the earth's atmosphere, and a resultant rise in the sea-level), which listed Kiribati as one of the countries that would completely disappear beneath the sea in the 21st century unless drastic measures are taken. None of the land on the islands is more than 2 meters above sea level, making the country extremely vulnerable to the effects of climate change.

The current president, Teburoro Tito, declared that reducing Kiribati's dependence on foreign aid would be a major objective for his government. He also announced his intention to pursue civil and criminal action against members of the previous administration for alleged misuse of public funds while in office.