This article provides a clear, data-driven overview of the individual income tax framework for Timor-Leste (TL) as of 2025. All relevant rates, rules, and assessment criteria are summarized to assist professionals and business owners evaluating personal tax obligations in this jurisdiction.
Individual Income Tax Structure in Timor-Leste (2025)
Timor-Leste operates a progressive individual income tax system, applying different tax rates according to income level. Tax is assessed on total income and is expressed in US dollars, which is the official reporting and tax payment currency.
Income Tax Brackets (2025)
Below is an overview of the personal income tax brackets in Timor-Leste for 2025. These bands apply to both residents (on their worldwide income) and non-residents (on Timor-Leste-sourced income only, with an additional surtax condition—see below):
| Taxable Income (USD) | Tax Rate (%) |
|---|---|
| 0 – 6,000 | 0 |
| Over 6,000 | 10 |
- Income up to USD 6,000 is taxed at 0%.
- Income exceeding USD 6,000 is taxed at a flat rate of 10% on the amount above this threshold.
Surtaxes and Special Conditions for Non-Residents
Specific surtax rules apply to non-residents. The Timor-Leste tax authority imposes a flat 10% tax on all Timor-Leste-sourced taxable income for non-residents, regardless of the income amount or bracket. No progressive bands or exemptions are available under this regime.
| Non-Resident Income Source | Surtax Rate (%) |
|---|---|
| Timor-Leste sourced taxable income | 10 |
Assessment Basis and Currency
- The income tax system is assessed on an annual basis.
- Taxable income is measured in US dollars (USD). For foreign currency earnings, local regulations require conversion to USD at the prevailing rate on the date income is received or accrued.
No information is currently available regarding minimum or maximum holding periods for income recognition or for preferential rates tied to income duration. This aligns with common practice in straightforward progressive income tax systems.
Summary Table: Individual Tax Framework (Timor-Leste, 2025)
| Aspect | Details (2025) |
|---|---|
| Taxation Type | Progressive |
| Assessment Basis | Earned income (annual) |
| Currency | USD |
| Resident Tax Brackets | 0% (up to 6,000 USD), 10% (over 6,000 USD) |
| Non-Resident Taxation | Surtax 10% on Timor-Leste sourced income (no bands) |
| Surtaxes/Additional Levies | None beyond non-resident rule |
| Rates for Investment Income | Current data not publicly available |
Pro Tips: Optimizing Your Tax Position in Timor-Leste
- Review your residency status closely—residents and non-residents face very different income tax calculations. Structuring your affairs for clarity on this point can yield significant tax consequences.
- Maintain complete, up-to-date records of all income received in currencies other than USD. Conversion timing and rates can affect your reported taxable base if you earn income in multiple jurisdictions.
- If you are a non-resident with Timor-Leste-sourced income, note that the 10% flat tax applies from the first dollar; there is no nil-rate band or exemption threshold. Plan cash flows accordingly when accepting projects or employment locally.
- Monitor official sources for any legislative adjustments to rates or brackets, as these may be updated on an annual basis by Timor-Leste tax authorities. Official details can be found at mof.gov.tl.
In summary, Timor-Leste’s individual income tax structure for 2025 is relatively straightforward, with a 0% rate on the first USD 6,000 and a flat 10% applied above that threshold for residents. Non-residents should be aware of a flat 10% rate with no exemption on locally sourced income. All income is assessed in USD, and no further information is available on other individual tax types or rates at this time. Staying updated with official resources ensures ongoing compliance and optimization of your tax position in Timor-Leste.