In Kiribati, employers have several tax responsibilities. One of these is contributing to the Kiribati National Provident Fund (KNPF). The mandatory contribution rate for employers is 7.5% of the employee's gross salary. This contribution is made on top of the employee's salary – it's not deducted from the employee's pay.

Withholding Income Tax (PAYE)

Employers are also responsible for withholding income tax from their employees' salaries based on a Pay-As-You-Earn (PAYE) system. The amount of tax withheld depends on the employee's income level and is calculated using tax tables issued by the Kiribati Taxation Office. Withheld income taxes must be remitted to the Kiribati Taxation Office on a regular basis, usually monthly.

Other Employer Obligations

In addition to these, employers are required to keep accurate payroll records, including employee salaries, deductions, and contributions. They must provide employees with payslips that clearly outline their gross pay, deductions (income tax and social security), and net pay. Furthermore, employers must submit an annual reconciliation of income tax withheld and social security contributions made.

Employees in Kiribati are required to contribute to the Kiribati National Provident Fund (KNPF). The mandatory contribution rate for employees is 5% of their gross salary. These contributions are deducted directly from their paycheck.

Employee Social Security Contributions

Kiribati operates a Pay-As-You-Earn (PAYE) system for income tax. This means your employer is obligated to withhold income tax from your salary before paying you. The amount of tax withheld is determined by your income level and calculated based on tax tables issued by the Kiribati Taxation Office.

Income Tax (PAYE)

Your payslip should clearly show your gross salary, income tax deductions, social security contributions, and the final amount you receive (net pay). It's important to keep your payslips for tax filing purposes.

Important Considerations

In Kiribati, there is currently no Value Added Tax (VAT) system. This implies that goods and services supplied within the country are generally not subject to VAT.

Other Tax Considerations

Even though there is no VAT in Kiribati, service providers should still be aware of other applicable taxes and levies that may apply to their business activities. These may include:

• Business License Fees: Businesses in Kiribati may be required to obtain licenses and pay associated fees.
• Other government charges or fees: There may be industry-specific charges or fees levied by the government.

Service providers are advised to consult with a registered tax agent or the Kiribati Revenue and Customs Office for specific guidance on their tax obligations.

Kiribati offers various tax incentives to businesses operating in key development sectors such as tourism, manufacturing, fishing and aquaculture, and agriculture. These incentives include tax holidays, the length of which can vary depending on the sector and the size of the investment.

Import Duty Exemptions

Businesses investing in Kiribati may be eligible for exemptions from import duties on raw materials, machinery and equipment, and building materials for approved projects.

Depreciation Allowances

Kiribati offers accelerated depreciation allowances for certain types of assets, such as machinery and equipment. This allows businesses to deduct the cost of these assets from their taxable income at a faster rate, reducing their tax liability in the early years of operation.

Other Incentives

Businesses engaged in new or expanding industries may be granted Pioneer Status, resulting in a reduced corporate income tax rate for a specific period. Additionally, businesses are allowed to carry forward operating losses for up to a certain number of years to offset against future profits.

Applying for Incentives

Businesses interested in taking advantage of tax incentives should contact the Kiribati Investment Corporation or the Ministry of Commerce, Industry and Cooperatives.

Important Note

Tax incentives are subject to change. It's essential to consult with a tax advisor or the relevant government agencies for the most up-to-date information and to ensure eligibility.