Business in Timor-Leste

Timor-Leste has a national business framework rather than separate municipal incorporation systems. Formal registration is handled mainly through SERVE,I.P., the public service for business registration and related administrative intake. Informal self-employment and household activities remain highly relevant, especially in agriculture, retail and other small-scale livelihoods, but they do not provide the same evidence of registration, access to formal finance or protection through a registered company structure. Common formal structures include Empresário em Nome Individual (ENIN), which is an individual business; Empresa Unipessoal Limitada (UNIPESSOAL,LDA), which has one shareholder; Sociedade por Quotas (LDA), which generally has two to thirty shareholders; and Sociedade Anónima (S.A.), which requires at least three shareholders and has no stated maximum. Other options include a foreign branch or permanent representation, a state-owned enterprise and other public-company forms. SERVE states a general minimum share capital of USD 1 for companies, while an S.A. has a minimum of USD 50,000 and a foreign branch or permanent representation has a minimum of USD 5,000. The suitable structure depends on ownership, liability, planned investment, governance and whether the activity belongs to a foreign company. A formal application normally requires a proposed name, a physical head-office address and map, identification, the relevant constitutive act or statutes, shareholder tax identifiers, administrator acceptance and proof of capital where applicable. ENIN applications use SERVE forms F_1 to F_3 and may also require marriage, divorce or cohabitation evidence and a power of attorney. Foreign companies must provide proof of existence in the country of origin, statutes, decisions establishing the branch or representative, the Timor-Leste address and legalized documents with certified translation into an official registration language. Tetum and Portuguese are valid registration languages; an English translation is informative but does not replace the valid registration version. SERVE can handle name admissibility, commercial registration, the Certificado de Registo Comercial (CRC), the Número Único da Empresa (NUE), tax-registration intake, activity authorization and some sector-licensing intake. The NUE also functions as the business identifier used in public administration and as the tax identifier known as the NIF or TIN. A Certificado de Admissibilidade de Firma (CAF) reserves the accepted name for 60 days, while the separate name decision is stated to take no more than two days. SERVE describes registration as free of charge and its statutory procedure as taking no more than five working days, but licensing, visas, document legalization, translation, inspections and other ancillary costs can extend the process. A registration summary is published within 24 hours after registration and remains publicly available for seven days. Completed registration gives the company an exclusive right to use its registered firm name, but registration alone does not authorize every activity. The business activity should be identified through its CAE activity classification. Since the reform under Decree-Law 83/2022 and Ministerial Diploma 33/2023, a general authorization requirement has been removed for activities that do not need a special permissive act. A prior declaration through SERVE may be enough for such activities. Special laws still require a sector license or authorization for activities involving technical, health, safety, environmental, financial or similar controls. Commercial import and export also require authorization through the relevant trade and licensing system. A low-risk activity may receive an Autorização para Exercício de Atividade (AEA), while medium- and high-risk activities may be sent to the Ministry of Commerce and Industry or another competent authority. The older rules describe AEA validity of one to five years, so the current CAE category and sector-specific law should be checked rather than treating an AEA as a substitute for a required sector license. Foreigners can generally hold up to 100% of a Timor-Leste business, subject to restrictions affecting areas such as petroleum and media. A foreign director normally needs a work visa or permanent residence; otherwise the company must have at least one resident or visa-qualified director. The Private Investment Law 15/2017 and Government Decree 2/2018 allow national and foreign investors to seek a Declaration of Benefit or a Special Investment Agreement. Possible benefits include income, sales, services or customs exemptions, state-property leases lasting 50 to 100 years, specialist visas and development-zone benefits. The cited thresholds for certain work-visa and state-land benefits are USD 50,000 for a national investor, USD 500,000 for a foreign investor and USD 250,000 for a qualifying joint venture. TradeInvest facilitates investment, but these benefits are not automatic. Every business must register for tax with the Autoridade Tributária de Timor-Leste (ATTL). The tax year runs from 1 January to 31 December. Businesses may have monthly or quarterly installment duties, and legal persons are subject to a 10% income-tax rate under the cited rules. A resident individual with business income has a 0% rate up to USD 6,000 of annual taxable income and 10% above that amount; a non-resident individual has a 10% rate. Hotels, restaurants and bars, and telecommunications are designated services subject to a 5% Services Tax on total monthly receipts once receipts from those designated services reach USD 500 in a month. That tax is due by the 15th day of the following month. Examples of withholding rates include 10% for royalties, rent and prizes, 2% for construction and 4% for construction consulting. A tax-clearance certificate can be needed for license renewal, imports, visas, tenders and loans. Commercial imports require a tax identifier, CRC, tax-clearance certificate and an authorized ASYCUDA user or customs broker. The declaration is a DAU, and the Customs Authority applies the relevant customs procedure. The cited treatment period is up to 30 business days for sea imports and 20 business days for air or land imports. Import duty is generally 5% of customs value, while sales tax is 2.5% of customs value plus import duty and the excise base; excise depends on the product. Export declarations should be submitted at least one working day before the vessel arrives. Agriculture, health, transport, petroleum and other sectors may require additional permits. IADE provides business training, counseling, business-plan competitions, market research, marketing support, incubation and business linkages. Its Business Incubation Facility supported beneficiaries in twelve municipalities during 2020 to 2024, with 74 people recorded and 36% women; a Dili Business Incubation Center had its foundation stone laid in January 2026, but operational access was not yet evidenced. The Central Bank's Credit Guarantee Scheme shares credit risk for economically viable Timorese-owned micro, small and medium enterprises in sectors including agriculture, tourism, manufacturing, transport, trade and services. A lender still decides whether to approve credit. BNCTL products typically require a valid SERVE license, CRC, tax-clearance or debt certificate, financial records, a project and sometimes collateral. One cited product page lists a maximum rate of 7.5% per year and administrative or other costs of 1.75%, but terms depend on the product and lender. SERVE's website snapshot lists 29,518 sole traders, 18,676 single-shareholder companies, 6,223 joint-shareholder companies, 105 joint-stock companies, 156 foreign branches and 8 state-owned enterprises. These registry figures do not equal the complete number of active enterprises. The 2022 Enterprise Survey counted 6,256 operating business-sector enterprises and 53,120 employees; 84% were micro-enterprises, 56% were in Dili and 66% were concentrated in wholesale and retail, construction, and accommodation and food. The survey excluded agriculture and household informal activity. Labour-force data from 2021 indicate informal employment of 77.3% overall, 80.4% among women and 75.3% among men, with especially high levels in agriculture and industry. These figures show the scale of informal livelihoods but do not measure the exact number of informal enterprises. Stopping work does not by itself close a registered business. Tax returns remain due until proper closure. SERVE enforcement information states that two consecutive years without an annual return can lead to cancellation of an AEA or license, three years can lead to suspension of registration and four years can lead to ENIN cancellation or referral of a company for liquidation, following a 90-day cure notice. A company normally closes through dissolution, liquidation and registration of the liquidation closure. Its legal personality continues during liquidation. Extrajudicial liquidation can take up to two years, and liquidators should request closure registration within 15 days after the closure decision. A company may be dissolved by shareholder decision, expiry, inactivity, loss or illegality of its purpose, insolvency or a court order.