East Timor is aggressively being marketed as a location for business by the Timorese authorities. Timor is the ideal location for business because of its lower corporate tax rate and various benefits for foreign businesses. Residents who pay individual or corporation taxes pay a flat 10% tax on their taxable income. The prospect of Timor joining ASEAN as the 11th member is another rationale for starting an industry there.
This indicates that East Timor will join the ASEAN Free Trading Zone as a new partner. This kind of tax structure, serves as a gateway for businesses looking to enter the developing Asian markets and has the potential for becoming a center for global trade. The prerequisites and the steps you must take if you want to create a new business in Timor are listed below.
Learn about the economy and sectors
The country’s GDP is expected to fall in 2023, as a result of the decline in oil and gas production. Analysts anticipate real GDP to rise by 3% in 2024 as non-oil growth is still financed by withdrawals from the Petroleum Fund. Timor-Leste has a market economy that is mostly based on subsistence farming in the majority of its settlements. A little more than 80% of people work in farming. Oil and gas, cocoa, and communications (remittances) are the main commodities, followed by tourism.
You must educate yourself with these facts and conduct a thorough market analysis if you want to succeed in the country’s market.
Access your finances
You might need to take loans or you can have the resources to finance your venture. Find out what your initial costs will be as soon as possible and then make a thorough financial plan.
Also, keep an eye on your spending. Don’t start a business by overspending. It is common to hire a different company to manage a part of your company’s corporate projects. Understand the types of holdings that are appropriate for your organization, and avoid paying extra for pricey new equipment that will not boost your organizational objectives. Make sure you are on track by keeping an eye on your business spending.
Choose the business form
Based on your company’s objective, you should use a variety of corporate structures. Each form of construction has benefits and drawbacks of its own. Better asset security and tax effectiveness are guaranteed with the correct kind of structure. The capital needs for each kind of corporate entity in Timor-Leste are listed below.
Single Shareholder LLC
It requires a single investor and shares capital ranging from US$5,000 to US$500,000.
Limited liability company
It requires a share capital of at least US$5,000 and up to US$500,000, and no more than 30 investors.
Joint Stock Company (S.A.)
It allows at least three owners and requires a share capital of $50,000.
Open a bank account
Your needs ultimately determine the best bank for your company. You can focus your search by outlining your banking requirements in writing. ANZ, Mandiri Dili, BRI, and BNU are the top corporate banks in the nation that provide the greatest corporate packages and loans. You must open a corporate account in the company’s name at the chosen bank and deposit the necessary capital thereafter.
Register the business
The procedure to register a company is simple and may typically be completed in two to three working days. Banks in Timor-Leste will grant registered businesses access to loans and the ability to open bank accounts. The following are the steps involved in incorporating a business, as per the Judiciary:
- Register a unique company name;
- Submit the request;
- Apply for tax registration;
- Open a bank account, and
- Submit all essential documents.
A corporate license must be obtained at the National Agency for Internal Trade following the issuing of the Business Registration Card and the TIN.
