Tax
Gross revenue and wages taxes, no corporate income or capital gains tax
Businesses pay a gross revenue tax rather than tax on profit, and wages are taxed at low flat rates. There is no corporate income tax, no capital gains tax and no VAT.
Key rules
- Jurisdiction — National, administered by the Division of Revenue and Taxation. Non-resident domestic entities under the Associations Law are outside the domestic tax base because they may not trade locally.
Governing law
- Income Tax Act 1989wages and salaries
- Gross Revenue Tax Act
- Import Duties Act
- Associations Law 1990non-resident entities
In practice
The system taxes turnover and wages rather than profit. Businesses pay gross revenue tax on receipts, which means loss-making enterprises still pay, and there is no deduction structure of the kind an income tax would require. Wages and salaries tax is withheld at flat rates with a low threshold. Import duties are a major revenue source given near-total reliance on imported goods. There is no value added tax, no capital gains tax, no inheritance tax and no corporate income tax, and proposals to replace the gross revenue tax with a consumption tax have been debated repeatedly without enactment. Non-resident domestic entities registered under the Associations Law pay annual fees rather than tax, which is the historical basis of the jurisdiction's use in international structuring and the reason economic-substance rules now apply.