Tax
Income Tax Act with consumption tax; fishing and .tv revenue dominate
Income tax under the Income Tax Act administered by Inland Revenue, with a Tuvalu Consumption Tax. Government revenue depends far more on fishing licences, the .tv domain and the Tuvalu Trust Fund than on domestic taxation.
Key rules
- Deadline — Income tax returns are filed annually with Inland Revenue
- Deadline — Consumption tax returns are filed monthly by registered persons
Governing law
- Income Tax Act (Cap. 26) (s. 4)
- Tuvalu Consumption Tax Act 2009
- Tuvalu Trust Fund Agreement 1987
- Excise Tax Act
In practice
Domestic taxation is a minor part of the fiscal picture. Income tax applies to employment and business income with a small taxpayer base, and the Tuvalu Consumption Tax operates as a value added tax at a low rate. The state's revenue rests on three unusual pillars: fishing access fees earned through the vessel day scheme under the Parties to the Nauru Agreement, licensing of the .tv country-code domain, and distributions from the Tuvalu Trust Fund, a sovereign fund established in 1987 with Australian, New Zealand and British contributions that smooths budget volatility. Any fiscal analysis that looks only at the tax statutes will misunderstand the system.