In 2025, this article provides a clear overview of the availability and regulatory conditions for sole proprietorship or a similar individual business status in Timor-Leste. All information is based on official sources and reflects current legal requirements and tax obligations.
Sole Proprietorship Status in Timor-Leste: What’s Available?
Timor-Leste does not offer a distinct sole proprietorship regime similar to those found in some other countries. Instead, individuals seeking to operate a business on their own may register as a sole trader (Empresário em Nome Individual). This process requires formal business registration, and there is no simplified or micro-entrepreneur system that allows operating as an individual without full registration as a legal entity.
Conditions for Registering as a Sole Trader
Every individual planning to trade as a sole trader must register their business as a legal entity with the official business registry, the Serviço de Registo e Verificação Empresarial (SERVE). Operating informally or simply under your own name is not permitted; compliance with full business registration is mandatory.
Key Features and Requirements
- No simplified or micro-entrepreneur regime: There is no fast-track, threshold-based system for small or individual businesses.
- Mandatory registration: All businesses—including individuals operating as sole traders—must undergo formal registration and adhere to standard legal protocols.
- Legal entity required: Even sole traders must register as a legal entity to issue invoices or operate with clients.
- Standard tax and regulatory compliance: All businesses, regardless of size or type, must fulfill the usual tax and reporting obligations set by Timor-Leste authorities.
Tax Obligations for Sole Traders in 2025
Sole traders in Timor-Leste are subject to the same tax rates and compliance measures as other business structures. The main applicable taxes for the 2025 fiscal year are summarized below:
| Tax Type | Rate (%) |
|---|---|
| Income Tax | 10% |
| Services Tax | 2% – 4% |
There are no special reduced rates or simplified regimes for sole traders or micro-entrepreneurs. All businesses must comply with standard tax filings and payment protocols, irrespective of business size.
Regulatory Compliance
Business owners must ensure compliance with all regulations, including:
- Formal registration with SERVE
- Tax registration with the government (Ministry of Finance)
- Maintenance of accurate accounting records and timely tax filings
Pro Tips for Registering as a Sole Trader in Timor-Leste
- Plan for formal registration with SERVE, as unregistered activity is not recognized and may result in penalties.
- Ensure you understand the full scope of annual income and services taxes, and allocate appropriate resources to meet your obligations.
- Consult the official SERVE and Ministry of Finance websites regularly for updates to business and tax regulations.
- Keep in mind there is no simplified or reduced regime—budget for compliance and tax obligations accordingly from your first year of operation.
Sources
- SERVE (Business Registry of Timor-Leste)
- Ministry of Finance – Taxation
- Investment Guide Timor-Leste
To sum up, in 2025 Timor-Leste does not offer a unique sole proprietorship or micro-entrepreneur status. All individuals must register their businesses formally and adhere to standard tax rates and compliance measures. Tax rates for income and services remain uniform for all types of businesses, with no special exceptions for small operations. Practical planning, registration, and bureaucratic readiness remain essential for anyone intending to operate a business in Timor-Leste.