Timor-Leste expat tax 2026: the 10% rate

Timor-Leste has one of the simplest and lowest personal tax systems in Asia. Almost everything is taxed at a single rate of 10%, the country uses the US dollar, and dividends and inheritances aren't taxed at all. What changes is where the 10% starts: residents get a tax-free slice, non-residents don't.

This guide covers Timorese personal tax for people moving to or working in Timor-Leste in the 2026 tax year (the calendar year, 1 January to 31 December 2026) under the Taxes and Duties Act of 2008: residence, wage income tax, freelancing, investments and pensions, social security, treaties and visas.

What's changed: the income tax rates haven't changed since the Taxes and Duties Act took effect in 2008. The Act has been amended twice, in 2019 (for petroleum operations in the Timor Sea) and in 2023 (to clarify when a foreign business has a permanent establishment), and neither amendment changed personal tax. The bigger change for employees came in social security: since the contributory scheme started in 2017 employees pay 4% and employers 6%, and since 2021 sole traders have to join too. A value added tax is being drafted, with the 2026 budget papers planning to introduce it in 2027. It's Proposed, not law.

📋 Timor-Leste tax at a glance for 2026

Timor-Leste's official currency is the US dollar, so the US$100k, US$40k, US$20k and US$1m examples in this guide need no conversion.

👉 Central Bank of Timor-Leste: Decree-Law 20/2003 on legal tender (the US dollar)

Resident or non-resident: where the 10% starts

Why does residence matter if the rate is 10% either way? Because it decides whether you get a tax-free slice, and whether your income from abroad is taxed too.

Image 1 — one 10% rate, two different starting points

• Residents pay nothing on the first US$500 of wages each month and 10% on the rest. On other income, such as business profit, rent or interest, the first US$6,000 a year is tax free and the rest is taxed at 10%. Income from abroad is included, with a credit for foreign tax paid on it.

• Non-residents pay a flat 10% on their whole salary for work in Timor-Leste, with no tax-free slice. Other Timorese income paid to them, such as fees, interest or royalties, has 10% withheld by the payer, and that's a final tax.

Wage income tax is a separate tax from income tax. Wages that go through wage income tax aren't added to your other income, and once your employer has withheld the right amount you have nothing more to pay on them.

One point catches remote workers. The Act taxes wages for work done in Timor-Leste, and it doesn't limit this to local employers or set a minimum stay. If you work from Dili for a foreign employer that doesn't run a Timorese payroll, ask the Tax Authority how to declare and pay the wage tax.

👉 Timor-Leste Tax Authority (ATTL): wage income tax for residents and non-residents

When you become tax resident in Timor-Leste, and how you stop

You're resident for a year if you're in Timor-Leste for 183 days or more in total in any 12-month period that starts or ends in that year. The days don't have to be in a row. There's one escape: you're not resident if your permanent place of abode isn't in Timor-Leste. Government employees posted abroad also count as resident.

Because the window can start or end in the year, a stay that crosses 31 December can make you resident in both years.

Leaving is simple. Spend less than 183 days in any 12-month window touching the year, or move your permanent home abroad, and you're non-resident. We found no exit tax in the Act. After that, only your Timorese income is taxed, at the flat 10%.

👉 ATTL: annual income tax return guidelines, including the resident definition

Income tax rates for 2026

The tax year is the calendar year. Wages and other income have their own scales, both topping out at 10%.

Timor-Leste personal tax rates for 2026

Source: Taxes and Duties Act 2008, Schedules V and VI and articles 29, 54 to 57 and 61. The 10% on other income applies only to the part above US$6,000.

Your employer works out the tax each month, withholds it and pays it to the Tax Authority by the 15th of the following month. If you work only part of a month, the US$500 tax-free slice is reduced in proportion.

Worked example

• You're resident and a Timorese employer pays you US$100k a year: US$8,333 a month.

• The first US$500 is tax free. The other US$7,833 is taxed at 10%: US$783 a month, or US$9,400 a year (9.4%).

• Social security takes 4% of your gross salary: US$4,000 a year.

Your all-in bill is about US$13,400, or 13.4% of your salary. If you were non-resident, the wage tax would be a flat US$10,000 (10%).

👉 ATTL: Taxes and Duties Act 2008 (English translation), Schedules V and VI

👉 Jornal da República: Law 8/2008, the Taxes and Duties Act as published (in Portuguese)

Freelancing in Timor-Leste

As a resident freelancer or sole trader, your profit for the year is taxed at 10% above US$6,000, after deducting your business costs. On US$100k of profit, that's US$9,400.

• Instalments: during the year you pay instalments of 0.5% of your turnover, quarterly if your turnover was US$1 million or less last year, by the 15th of the month after each quarter. They're credited against your final bill.

• Annual return: anyone running a business files an annual income tax return and pays the balance by 31 March.

• Withholding: most service fees have none. Construction, transport and mining services have tax withheld.

• Social security: since 2021, sole traders have to join the contributory scheme. You choose a contribution band, from US$120 a month upwards, and contribute on it.

The tax is the easy part. You also need a visa that lets you work, and a residence visa for professional activity asks for a certified commercial registration (see below).

👉 ATTL: income tax instalments

👉 ATTL: withholding tax rates

Crypto, investments and pensions

Is crypto taxed in Timor-Leste? There are no crypto rules and no guidance. The Act counts gains on selling an asset as property income only if the asset isn't held on personal account, so a private investor's gains appear to fall outside that heading. But the Act also taxes "any other amounts" that increase your economic capacity, so the point isn't settled. If a gain is taxed, it's at 10% above the US$6,000 slice. Trading as a business is taxed as business profit at the same 10%.

• Dividends: exempt. The exemption covers dividends from any company, Timorese or foreign.

• Interest, rent and royalties: property income, taxed at 10% above the US$6,000 slice for residents. Rent and royalties paid to individuals have 10% withheld as a final tax.

• Share gains: outside property income if you hold the shares on personal account, with the same caveat as crypto.

• Pensions: the Act doesn't exempt pension payments. Annuities are property income, so plan on a foreign pension being taxed at 10% above US$6,000, with a credit for any foreign tax on it.

Inheritances aren't taxed, and nor are gifts from close family (first-degree relatives). There's no wealth tax.

👉 Ministry of Finance: Guide G05 to domestic income tax (2008 version)

Social security

Do expats pay social security in Timor-Leste? Usually, if they're employees. The contributory scheme run by the National Social Security Institute (INSS) covers everyone working under an employment contract:

• Employee: 4% of gross pay, withheld by the employer.

• Employer: 6%, for a total of 10%.

• Ceiling: we found no ceiling on the INSS pages, so the 4% applies to your whole base salary. Overtime, performance bonuses and allowances such as travel and meals are left out of the base.

• Sole traders: compulsory since 2021, on a band you choose.

There's an exception for people here for a while. Workers in Timor-Leste temporarily, for up to ten years, who prove they're covered by another country's social protection scheme are outside the Timorese scheme. Portugal also has a social security convention with Timor-Leste, in force since 9 October 2023.

👉 INSS: social security contributions (in Portuguese)

👉 INSS: social security laws, including Law 12/2016 and its temporary-worker exception (in Portuguese)

👉 Jornal da República: Decree-Law 30/2021, bringing sole traders into the scheme (in Portuguese)

Double tax treaties

Does Timor-Leste have double tax treaties? Very few. We couldn't find an official Timorese list, so we don't give a count. The one we could confirm is with Portugal: signed in 2011 and in force since 12 October 2022, according to Portugal's tax authority. It caps withholding on interest and royalties at 10%.

Without a treaty, you rely on Timor-Leste's foreign tax credit, capped at the Timorese tax on that income, and on your other country's own rules.

👉 Portuguese Tax Authority: table of Portugal's tax treaties, including Timor-Leste (in Portuguese)

👉 Diário da República: Portugal and Timor-Leste social security convention in force (in Portuguese)

Living in Timor-Leste long term

Timor-Leste has no digital nomad visa. The tourist visa, available on arrival, is valid for 30 days and can be extended once for 30 more, and it doesn't allow any professional activity. Citizens of the EU (except Ireland) and the other Schengen countries can visit visa free for up to 90 days in any 180 days, but not for paid work; this doesn't apply to UK citizens.

For a longer stay you need a visa tied to a purpose:

• Temporary stay visa: for specialised work, such as highly qualified technical, research or journalistic work, with a named employer or sponsor. It lasts up to a year and can be extended.

• Visa to establish residence: a 90-day visa to apply for a temporary residence permit, for employment or other professional activity (with a certified commercial registration) or family reunification.

A visa doesn't change the tax rules. The 183-day test applies whatever visa you hold.

👉 Migration Service of Timor-Leste: tourist visa

👉 Migration Service of Timor-Leste: visa exemptions, including EU and Schengen citizens

👉 Migration Service of Timor-Leste: temporary stay visa

👉 Migration Service of Timor-Leste: visa to establish residence

Who is Timor-Leste good for?

How does Timor-Leste compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on 2026 rules and the all-in cost including social security, in US dollars.

☑️ Who is Timor-Leste good for? Tax ratings for expats in 2026

Filing and deadlines

The tax year is the calendar year. If a deadline falls on a weekend or public holiday, it moves to the next business day.

• Wage income tax: withheld by your employer and paid by the 15th of the following month. Employers file an annual wage tax form by 31 March. Employees with only wages don't file a return.

• Annual income tax return: due with any tax to pay by 31 March 2027 for 2026, if you have business or other taxable income.

• Instalments, withholding and other monthly taxes: by the 15th of the month after the month or quarter. The Tax Authority asks people to file and pay between the 1st and the 10th, because its e-Tax system is often unstable near the deadline.

• Social security: the monthly pay declaration is due between the 1st and the 10th of the following month, and payment between the 10th and the 20th.

👉 ATTL: due dates for payments and returns

👉 INSS: employers' obligations and deadlines (in Portuguese)

Frequently asked questions

What is the income tax rate in Timor-Leste in 2026?

10%. Residents pay 0% on the first US$500 of wages a month and 10% above it, and 0% on the first US$6,000 a year of other income and 10% above that. Non-residents pay 10% on all their Timorese income, with no tax-free slice.

When do I become tax resident in Timor-Leste?

When you're in Timor-Leste for 183 days or more in any 12-month period that starts or ends in the tax year, unless your permanent home is outside Timor-Leste. Residents are taxed on income from all sources.

Are dividends taxed in Timor-Leste?

No. Dividends are exempt income under the Taxes and Duties Act, whether the company paying them is Timorese or foreign. Interest, rent and royalties are taxed at 10%, and inheritances aren't taxed.

Do expats pay social security in Timor-Leste?

Employees usually do: 4% of gross pay, with the employer adding 6%. Workers in Timor-Leste temporarily, for up to ten years, who prove they're covered by another country's scheme are outside it. Sole traders have had to join since 2021.

Does Timor-Leste have a digital nomad visa?

No. The tourist visa lasts 30 days, can be extended once and doesn't allow any work. For a longer stay you need a temporary stay visa for specialised work or a visa to establish residence for employment, a business or family reasons.

Does Timor-Leste have VAT?

Not yet. The government is drafting a VAT law, and the 2026 budget papers plan to introduce it in 2027. It's Proposed, not law, so check the Tax Authority's news before you plan around it.

Where to go next

👉 Best countries for freelancers

👉 Easiest countries to become tax resident

👉 Lowest-tax countries for expats: 153 ranked