At the heart of the central Pacific Ocean lies the serene nation of Kiribati. It is an archipelago comprising 32 atolls and reef islands, and one raised coral island dispersed over 3.5 million square kilometers. Despite its tranquil façade, the country boasts an overlapping tax structure that plays an integral part in its economy. This article explores the tax system in Kiribati and how it shapes the business landscape in the country.
Taxation in Kiribati
Kiribati follows a comprehensive tax structure that involves both direct and indirect taxes. The primary direct tax is income tax, which is charged on the worldwide income of Kiribati residents, while non-residents are taxed only on their Kiribati-sourced income. At a flat rate of 20%, businesses of all sizes and industries, residents, and non-residents alike operate under the same tax rate.
Moreover, Kiribati has a Value Added Tax (VAT) system, which was introduced in 2014 and designed to replace the goods and services tax. Currently set at a rate of 15%, VAT applies to nearly all goods and services.
Business Landscape in Kiribati
Despite the lack of natural resources, Kiribati has an open economy with foreign businesses taking an active part in its markets. Its reliance on imports, the export of fishery products, and international aid is palpable, forming a central role within its economy.
The vast majority of businesses in Kiribati are small to medium-sized enterprises (SMEs), most of which operate in the commerce and agriculture sectors. Thanks to the progressive tax policies, these businesses are able to thrive and contribute significantly to the country’s GDP.
Investment Opportunities and Incentives
Kiribati is a member of the Multilateral Investment Guarantee Agency (MIGA), which protects foreign investment against political risk. The country offers numerous incentives for foreign investors such as allowances for the depreciation of property, plant, and equipment, and investment tax relief.
Moreover, the government is keen on developing partnership opportunities with foreign investors, particularly within industries like commercial agriculture, fisheries, and tourism.
Tax Administration
The Kiribati Revenue Equalisation Reserve Fund (RERF) is the body responsible for managing taxation in the country. It ensures equitable tax collections and enforces compliance among taxpayers.
In conclusion, Kiribati presents an appealing prospect for those looking to do business or invest in a stable fiscal environment, thanks to its robust taxation system and investment-friendly policies. As this small island nation continues to evolve fiscally, the tax structure and business landscape in Kiribati remains a pivotal lens through which to view the country’s economic potential.
Suggested Related Links:
Ministry of Finance and Economic Development, Kiribati
Republic of Kiribati Official Government Portal