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East Timor, usually known as Timor-Leste, is an island nation in Southeast Asia. It is officially known as the Democratic Republic of Timor-Leste (Portuguese: Repblica Democrática de Timor-Leste, Tetum: Repblika Demokrátika Timór-Leste). It consists of the eastern half of Timor, the surrounding islands of Atauro and Jaco, and Oecusse, an exclave on the island's northeastern side bordered by Indonesian West Timor. The Timor Sea separates the nation from its southern neighbor, Australia. The nation is 15,007 square kilometers in size (5,794 sq mi). Its capital is Dili.
East Timor was colonized by Portugal in the sixteenth century and was known as Portuguese Timor until November 28, 1975, when the Revolutionary Front for Independent East Timor (Fretilin) proclaimed independence. It was attacked and seized by the Indonesian military nine days later, and it was designated as Indonesia's 27th province the next year. The Indonesian occupation of East Timor was marked by a decades-long battle between separatist factions (particularly Fretilin) and the Indonesian military.
Indonesia ceded sovereignty of the area in 1999, after a United Nations-sponsored act of self-determination. On 20 May 2002, Timor-Leste became the first new sovereign state of the twenty-first century, joining the United Nations and the Community of Portuguese Language Countries. East Timor expressed its ambition to join the Association of Southeast Asian Nations as the eleventh member in 2011. (ASEAN). East Timor and the Philippines are Southeast Asia's only two primarily Catholic countries.
Employers and employees both have the right to end their contracts with sufficient notice. Employers may terminate an agreement only for the reasons specified in the Labour Code, which are as follows: contract expiration for fixed-term agreements; mutual agreement between parties; termination on the employee's initiative; termination on the employer's initiative on reasonable grounds; and termination for market, technological, or structural reasons relating to the business, with a minimum of no less than one year.
In Timor-Leste, the notice period is limited to 30 days.
The probation period is set at eight to fifteen days for fixed-term contracts. For contracts with an indefinite duration, the probation period is set at one to three months.
There are no specific provisions tailored to severance payments in Timor-Leste.
According to the Labour Code, working hours cannot exceed eight hours per day or 44 hours per week. Employees are not permitted to work more than four hours of overtime per day or sixteen hours per week unless the additional overtime is necessary to prevent or repair severe damage to the business. Employees are entitled to a one-hour break after every five hours worked.
Additional compensation is required for overtime, work on public holidays, and night work. Overtime work is compensated at 50% of the regular rate of pay. Working on a federal holiday is compensated at twice the regular rate of pay. Work performed at night or between the hours of 9 p.m. and 6 a.m. is compensated at 125 percent of the regular pay rate.
Timor-Leste's minimum wage rate is US$115 per month.
Because Timor-health-care Leste's system is mostly financed by the government, employer-provided health-care coverage is not needed.
Individuals have access to a government-run social security system, and businesses are required to enroll both the firm and its workers in the system. Employers may incorporate their own perks and provisions for internal workers, but they are not required to provide any extra benefits.
According to the Labour Code, workers must give one yearly bonus on or before December 20 of each year. The bonus should be equal to one month's salary. There are no further incentives needed, but your business may provide additional bonuses to create a more attractive job package to local talent.
Timor-Leste citizens are taxed on global taxable income, which is defined as the difference between gross income and allowed deductions. Non-residents are typically taxed on Timor-Leste-sourced income attributable to a permanent establishment (PE). Non-residents who do not have a PE may be liable to a 10% WHT.
Corporate income tax (CIT) is typically levied at a fixed rate of 10% on corporate profits.
Timor-Leste citizens are taxed on their global income, while non-residents are taxed solely on their income earned in Timor-Leste. Residents with foreign-sourced income may be eligible for a foreign tax credit.
Individual taxpayers in Timor-Leste are taxed on their taxable income, which is the difference between their gross and net income.
The following are the income tax rates that apply to a domestic individual taxpayer:
For an annual taxable income of up to USD 6,000, the income tax rate is 0.
For an annual taxable income over USD 6,000, the income tax rate is 10 percent.
The income tax rate for non-resident individuals earning taxable income in Timor-Leste is 10% (flat rate) on all taxable income generated in Timor-Leste.
Sales tax is levied on the following items:
(1) taxable goods imported into Timor-Leste and
(2) taxable goods sold or taxable services provided in Timor-Leste on or after the date specified by Parliament.
Sales tax payers include the following individuals:
(1) A taxpayer who imports taxable goods into Timor-Leste.
(2) A taxpayer who sells taxable goods in Timor-Leste.
(3) A taxpayer who provides taxable services in Timor-Leste.
The sales tax rates for taxable products imported into Timor-Leste are 2.5 percent and 0 percent for the sale of taxable goods and supply of taxable services in Timor-Leste.
A journey to Timor-Leste may need obtaining a visa. You should examine the country's visa rules. What we can tell you is that nationals of the European Union and Cape Verde may enter Timor-Leste and remain for up to 90 days. In actuality, inhabitants of EU nations are permitted to remain for 90 days, but people of Cape Verde are only permitted to stay for 30 days. Visas on arrival are also available, although there are many types of visas on arrival. One is accessible at any point of entry and is only available to qualifying nations; the second is available to everyone else but may only be acquired at Presidente Nicolau Lobato International Airport and/or Dili Seaport. It allows you to remain for 30 days.
What you should know is that anybody may apply for a visa before they arrive. They may apply online or at one of East Timor's diplomatic posts.
You may read Timor-visa Leste's policy to find out where you stand on the visa requirements.
The next step is to investigate the criteria you must satisfy. You may do this online, but we suggest caution since the information you receive online is not necessarily the most credible. As an alternative, we recommend contacting the diplomatic mission and inquiring about the criteria. It is the most reliable source of information. In the meanwhile, we can inform you that all candidates must have: a valid passport that does not expire for at least another 6 months from the date of arrival, evidence of financial sustenance, and a hotel booking confirmation.
When a firm recruits a new employee, employment contracts must be formalized in writing, according to the 2012 Labour Code. These agreements must contain certain basic information, including, at a minimum, paragraphs describing the following employment details:
Position and responsibilities
Remuneration for work location
Contracts may specify whether employment will be for an indefinite or specified amount of time. Fixed-term contracts, including renewals, cannot be more than three years. The employer might impose a probationary period of eight or fifteen days for fixed contract periods, depending on the duration of the contract. The probationary period for unlimited contract periods might range from one to three months.
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If you wish to conduct business in Timor-Leste as an international firm, you must create either a subsidiary or a permanent representation in the country. If you are a nonnational, you must establish a subsidiary or a permanent representative in the country. The representative may be Timorese or a non-national resident of Timor-Leste.
To establish a subsidiary in Timor-Leste, you must satisfy a number of fundamental standards outlined in Law No.4/2004 on Commercial Companies.
You must register your subsidiary with the Ministry of Commerce, Industry, and Environment and receive a business license. To begin, you must incorporate your company as a Private Limited Liability Company. Typically, registration takes around two weeks. The license will cost you around USD 115.
To begin conducting business in the nation, you must follow the procedures outlined by the governing regulations. To begin, you should deposit a little amount of money in a bank. Then you must register your company and apply for several certifications and licenses, such as a:
1. Certificate of registration
2. Business license
3. Tax identification number
The SERVE (Service for Registration and Verification of Entrepreneurs, or Serviço de Registo e Verificaço Empresarial) platform streamlines the registration procedure in Timor-Leste. By law, your application should be assessed within five business days, but in reality, it may take longer if you have questions or require clarification on any area of your application.
You should upload the following papers to the single-service SERVE platform:
A. Identification of corporate entities
B. Memorandum of Association Acceptance Letters for each member of the corporate body
C. Taxpayer identification numbers for shareholders (TINs)
D. IDs of shareholders, as well as evidence of marital property, if relevant
E. Locations of your company's registered offices are shown on a map.
F. Documents attesting to the company's capital deposit
G. Certified copies of previous business authorizations, where relevant
H. SERVE will issue numbers to your stockholders if they do not have TINs.
You are responsible for verifying your registration with the Ministry of Finance after you have acquired a TIN. You may wish to have a corporate stamp made by a private seal maker since you may need one in the future when dealing with government organizations. The last stage in the setup procedure is to register your business and workers for Social Security, as required by law.
To incorporate, your company must have a Memorandum of Association, according to labor rules. The Memorandum may name one or more owners who are personally liable for the corporation, or it may create subsidiary responsibility. A private firm may have up to 30 stockholders.
Only Timorese citizens have the right to own private land. International entities, on the other hand, may obtain long-term leases of up to 50 years.