1. Timor-Leste Fiscal Framework
Angelo de Almeida
Revenue Commissioner
Ministry of Planning and Finance

2. Petroleum Taxation Act
• Introduction
• Framework
• Tax details
• Administration

3. Framework
• Overall administration framework
provided by UNTAET 2000/18
• The Petroleum Taxation Act (PTA)
supplements UNTAET 2000/18
• Scope – applies to Timor-Leste and
JPDA

4. Petroleum Tax Act Jurisdiction
Timor Location Map
DILI
KUPANG Joint Petroleum
Development Area
DARWIN
DARWIN
0 100 200 KM

5. Petroleum Taxation Act
• If Timor-Leste elects to take share of
project, then the PTA states no
capital gain, assessable income or
loss arises
• Petroleum related expenditure is
only deductible against petroleum
related income
• Taxable income and expenditure is
ring fenced by contract area

6. Tax Ring Fencing
Timor-Leste
or JPDA
Contract Area A Contract Area B
Field A Field B Field C Field D
PTA Treatment

7. Petroleum Taxation Act (cont)
• Rate is 30% of taxable income
– No branch profits tax
• Petroleum valuation principles
same as PSC
• Final withholding tax of 6% applies
to petroleum related services

8. Petroleum Taxation Act (cont)
• Income – revenue from PSC
• Deductible Costs:
– Exploration cost depreciation 5 year
straight-line
– Development costs 10 year straight-line
– Units of production depreciation for short-
life fields where >80% reserves produced
in first 5 years’ production
– Annual contributions to the
decommissioning cost reserve under PSC

9. Life of Project Fiscal Regime
Once exploration
While contractor is and development SPT paid only If
recovering costs costs are contractor return
and uplift recovered, profit exceeds 16.5%
Timor-Leste Share %
petroleum starts
Supplemental
Petroleum Tax
(PTA)
Uplift defers when 40% of revenue remaining
profit oil starts after cost recovery (PSC)
Income tax (PTA)
Income tax (PTA)
Note: Withholding
tax not shown
5% Royalty (PSC)
Time

10. Petroleum Taxation Act (cont)
• Supplemental Petroleum Tax
– Supplemental Petroleum Tax of 22.5%
post realization of 16.5% IRR
– Subsequent incremental investment may
reduce the IRR below 16.5% in which case
SPT is not paid again until the project
achieves a 16.5% IRR

11. Petroleum Tax Administration
• Timor-Leste is fully committed to the
principles of the Extractive Industries
Transparency Initiative (EITI)
• Timor-Leste Petroleum Tax Division (PTD)
has been providing professional services
to the Petroleum Tax Payers since year
2000
• Self assessment system will continue with
review and audit by PTD

12. Petroleum Tax Administration (cont)
• International tax professionals will be
retained to assist PTD
• PTD will continue to develop
computerized systems for tax
administration and communication
– Canadian SIGTAS (Standard Integrated
Government Tax Administration System) - fully
computerized tax administration software