Publication: Timor-Leste Economic Report, December 2021: Steadying the Ship
Date
2021-12-01
ISSN
Published
2021-12-01
Author(s)
World Bank
Abstract
Given the finite nature of petroleum
resources and associated sovereign wealth fund, it
iscritical for Timor-Leste to build a strong foundation for
sustainable revenue mobilization tofinance public spending
on development and poverty reduction. Timor-Leste faces the
risks ofa fiscal cliff as, under the current spending
trajectories, the Petroleum Fund may be fullyexhausted in
about ten years. In line with the recent Government’s
efforts, there is an opportunity to collect more revenue
using value-added and property taxes. The income tax rate is
among the lowest in the world while most excise tax rates
are insufficient. The authorities may consider to: (i)
introduce a value-added tax (VAT); (ii) raise outdated
excise tax rates; (iii) increase income tax rates, with a
view to promoting greater alignment with regional peers;
(iv) improve revenue administration by modernizing the tax
system and investing in capacity; and (v) evaluate the
potential of a property tax and reporting on tax
expenditures (while planning a gradual phasing out).
Citation
“World Bank. 2021. Timor-Leste Economic Report, December 2021 : Steadying the Ship. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/36733 License: CC BY 3.0 IGO.”