Taxes in Tuvalu

Tuvalu taxes are mainly source-based. Income tax can apply to Tuvalu-source income or income treated as Tuvalu-source, including business profits, dividends, employment income, interest, rent, royalties and service fees. Taxable income is generally gross income less deductions allowed by the Income Tax Act. Individuals pay 0% on income up to AUD 10,000, 15% on income above AUD 10,000 up to AUD 14,000, and 30% above AUD 14,000. Sole traders and partnerships use the individual rates. Resident companies are taxed at 30%, while the MFED registration form states a 40% rate for non-resident companies. For a person with only employment income, the employer normally withholds tax through the payroll system and reports it to the authorities. The employer's reporting usually replaces the employee's annual return, although an income statement can be requested. A sole trader or partnership with annual gross income below AUD 100,000 may fall under presumptive tax. The annual charge is AUD 100 for gross income up to AUD 10,000, AUD 250 for AUD 10,001 to AUD 30,000, and AUD 500 for AUD 30,001 to AUD 50,000. For AUD 50,001 to AUD 100,000, the charge is 2% of gross income for each quarter. Presumptive tax is final and does not allow deductions. Returns and payments are due at least 15 days after the end of each quarter. A business expecting taxable income above AUD 50,000 generally pays provisional tax in two instalments: one-third by 30 September and two-thirds by the last day of February. The Secretary may approve a different reporting year. The provisional payment exception can apply where the remaining liability is no more than AUD 1,000. TCT applies to taxable domestic supplies and imports. Registration is required when taxable supplies reach AUD 100,000 in a 12-month period, and voluntary registration is possible. The operational rate shown in the MFED form is 7%, although the Consumption Tax Act allows a rate between 3% and 10% to be set by regulation. Exempt supplies include medical, dental, nursing and other health services, education, financial services, residential land leases, the first 50 kilowatts of domestic electricity per month, aviation fuel, flour, rice, cabin biscuits, sugar and cooking oil. Exports are zero-rated. A registered business can claim input credit only for taxable business use and needs a TCT invoice or bill of entry. TCT returns and payments are due at least 30 days after the period ends: the January-to-March period by 30 April, April-to-June by 31 July, July-to-September by 31 October, and October-to-December by 31 January. For imports, the TCT base is the customs value plus customs duty, excise and other fiscal charges. Customs duty, excise and import levy depend on the goods and the applicable tariff. The Customs Revenue and Border Protection Department handles entry, valuation, assessment, collection, customs rulings, refunds, drawback and appeals. Licensed hotels and boarding houses collect 7% room tax on accommodation charges and submit the return and payment by the end of the month after each quarter. Late room-tax payment carries a 10% penalty on the unpaid tax. Landowners taxation generally applies to each parcel. The Kaupule within the relevant island's jurisdiction sets the assessment method and amount, subject to approval by the Minister. The notice is issued before 31 December. Payment is due before 31 March or three months after publication, review or appeal, with the later date applying. The local rate is not nationally uniform. A review request must normally be made within 30 days, and an appeal to the Minister within 30 days. Non-payment can lead to a fine of AUD 10 plus an additional quarter penalty. If the amount remains unpaid for two consecutive years, the matter can proceed through the Lands Court and may affect transfer or sale of the land. Passengers leaving Tuvalu by outbound aircraft generally pay AUD 30 airport departure tax and an AUD 5 aviation safety and security levy. Exemptions include transit passengers who do not leave the airport, children under 12, duty crew, calibration flights, search and rescue, emergency relief and state or ceremonial aircraft. An annual income-tax return is due at least two months after the reporting year ends. For a standard 31 December year-end, the normal deadline is the end of February. A written extension request goes to the Taxation Officer; the response is due within 10 working days and the extension is generally limited to four additional months. Employers file payroll withholding returns and pay the withheld amount within 30 days after each month ends, and submit annual employee data within the same period. Non-resident withholding tax returns also follow a 30-day deadline after the end of the relevant month. Records must generally be kept in Tuvalu or English, in Tuvalu, for at least five years. The MFED, Taxation Officer, Secretary and customs authorities can request information, access records, conduct audits, issue assessments or default assessments, and recover or seize assets under the applicable law. A written objection to an assessment goes to the Secretary within two months, with an appeal to a Senior Magistrate available under the relevant procedure. An objection or appeal does not by itself postpone payment. A late return can attract a AUD 500 penalty. Unpaid tax bears interest of 1% per month, and late-payment penalties start at 5% after three months with another 5% for each further three-month period. Where more than AUD 500 remains unpaid, a notice-based process can restrict departure from Tuvalu or close a business. Cross-border treatment depends on the source of the income, where work is performed, the payer and any treaty. Non-resident withholding tax under Schedule 5 is generally 15% for dividends, service fees and other specified gross income, 30% for specified alimony, and 40% for non-resident work performed in Tuvalu. A treaty rate can reduce the domestic rate. The United Kingdom–Tuvalu Double Taxation Arrangement is in force. The Taiwan–Tuvalu Income Tax Agreement was signed on 4 March 2026, entered into force on 11 June 2026 and applies from 1 January 2027; it provides, among other rules, a maximum 10% rate for dividends, interest and royalties, rules for permanent establishments and business profits, and a mutual agreement procedure.