East Timor to impose import duty

East Timor to impose import duty

DILI, East Timor (Reuters): A five percent import duty and a
sales tax of up to 15 percent for motor vehicles will soon apply
to goods coming into East Timor under a new tax regime announced
by the International Monetary Fund on Friday.

A sales tax on imported beer and wine of US$1.50 per liter, a
$1.50 per kilogram tax on cigarettes and a five cents per liter
tax on gasoline and diesel will also be applied.

"The basic principle is to have tax measures that are very
simple to administer because the administrative capacity of East
Timor is still very limited," IMF senior economist Luis Varennes
Mendonca told reporters in Dili.

"Essential import duties, sales taxes, the exemption of income
tax on coffee producers, these are the three tax measures," he
said.

The tax regulations were adopted by the 15-member National
Consultative Council (NCC), established by the United Nations
last December to ensure East Timorese were involved in the
decision-making process over the next two years as the territory
moves toward full independence.

"Of course there are tax exemptions that follow normal
international practice," he said. "Normal exemptions under the
Vienna convention, exemption for goods that are imported to be
re-exported and exemptions also on...goods imported by the United
Nations, other international organizations, non profit
organizations and so on."

The taxes are expected to raise up to $15 million this year,
he said.

Varennes Mendonca said the taxes would be retroactive for
"some businesses", but he did not believe they would discourage
new investors to the territory because the rates were so low.

"If you look at these numbers these tax rates are low by
international standards and the reason for that of course is that
we don't want to start with a heavy tax burden."

The IMF did not indicate when personal income tax would apply.