Tax
Income Tax Act with VAT at 12.5% and the sovereign RERF
Income tax under the Income Tax Act administered by the Taxation Division, with value added tax at 12.5% since the 2014 reforms. Fishing revenue and the Revenue Equalisation Reserve Fund dominate the budget.
Key rules
- Deadline — Income tax returns are filed annually with the Taxation Division
- Deadline — VAT returns are filed monthly by registered persons
Governing law
- Income Tax Act 1990 (s. 5)
- Value Added Tax Act 2013
- Excise Tax Act 2013
- Revenue Equalisation Reserve Fund Act
In practice
The 2013–14 tax reforms introduced VAT at 12.5% and excise taxes, replacing an older hotel and sales tax structure, and simplified income tax rates. The fiscal picture is nonetheless dominated by two non-tax items. Fishing access fees under the vessel day scheme can exceed all domestic tax revenue combined and fluctuate with tuna migration and El Niño cycles. The Revenue Equalisation Reserve Fund, established in 1956 from Banaban phosphate royalties, is one of the world's oldest sovereign wealth funds and buffers that volatility; its real value per capita has declined over decades, which is a live public-finance concern rather than a historical footnote.