Corporate Tax in Tuvalu

Tuvalu offers businesses two corporate tax methods: a standard 30% CIT on net profit or a simplified 1.5% tax on gross turnover (with the first A$30,000 of turnover exempt). Most businesses opt for the simpler turnover method.

Corporate Income Tax Rate

Tuvalu provides two options for business taxation:

• Standard Method: 30% CIT on net taxable profit
• Simplified Method: 1.5% of gross turnover (most common)

Standard CIT (30% on Net Profit)

Under the standard method, taxable income is calculated as gross revenue minus allowable deductions. The tax year follows the calendar year (January 1 to December 31).

Deductible Expenses

• Operating expenses directly related to business activities
• Depreciation of fixed assets
• Interest expense
• Rent and lease payments
• Employee salaries
• Professional fees and consulting costs

Non-Deductible Expenses

• Fines and penalties
• Dividends distributed
• Capital expenditures (must be depreciated)
• Personal expenses of shareholders

Simplified Turnover Method (1.5%)

Most businesses in Tuvalu prefer the simplified turnover method. Under this approach:

• Tax is calculated at 1.5% of gross turnover
• The first A$30,000 of gross turnover is exempt
• No deduction for expenses is allowed
• Simpler bookkeeping and filing requirements

Tax Incentives

• Turnover Exemption: First A$30,000 of gross turnover exempt under simplified method
• Foreign Investment Incentives: Priority sectors may qualify for reduced rates
• Carryforward of Losses: Tax losses can be carried forward (standard method only)

Filing Requirements

• Annual Tax Return: Due by March 31 following the tax year
• Monthly Withholding Tax: Due by the 15th of the following month
• Annual Financial Statements: Must be filed with the tax return

Withholding Taxes

Tuvalu imposes limited withholding taxes:

• Dividends to residents: 0%
• Dividends to non-residents: 10%
• Other domestic payments: 0% WHT

International Taxation

Tuvalu taxes residents on their worldwide income. Foreign tax credits may be available for taxes paid abroad on foreign-source income under the standard CIT method.