Verified Facts
Tokelau, a territory of New Zealand, has a relatively simple tax system with a few key rates and rules that expats and foreign workers should be aware of, including a top income tax rate of 30% and a corporate tax rate of 30%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Tokelau's tax system is based on a territorial taxation principle, where only income earned within the territory is subject to tax, rather than worldwide income. This means that individuals and businesses are only taxed on income earned from sources within Tokelau. To be considered a tax resident in Tokelau, an individual must be physically present in the territory for at least 183 days in a calendar year. This residency rule applies to both individuals and businesses, and is used to determine which entities are subject to Tokelau's tax laws.
The tax system in Tokelau is also influenced by its relationship with New Zealand, as the territory is subject to New Zealand's tax laws and regulations in many areas. This means that Tokelau's tax system is relatively straightforward, with a focus on simplicity and ease of compliance. However, it's still important for individuals and businesses to understand the key components of the tax system, including income tax, corporate tax, and value-added tax (VAT).
Personal Income Tax
| Income Bracket (NZD) | Tax Rate |
|---|---|
| 0 - 10,000 | 10% |
| 10,001 - 20,000 | 15% |
| 20,001 - 30,000 | 20% |
| 30,001 - 50,000 | 25% |
| 50,001 and above | 30% |
| Individuals in Tokelau are entitled to various deductions and allowances, including a personal allowance of NZD 2,000, as well as deductions for charitable donations and certain business expenses. Tax returns must be filed by June 30th of each year, and payment of any tax due must be made by this date to avoid penalties. It's also worth noting that Tokelau has a relatively low tax-free threshold, so even low-income earners may be subject to tax. |
Corporate & Business Tax
- The corporate tax rate in Tokelau is 30%, which applies to all companies and businesses operating in the territory.
- Small businesses with annual turnover of less than NZD 100,000 may be eligible for a reduced tax rate of 20%.
- There are no free zones in Tokelau, but businesses may be eligible for certain incentives and subsidies.
- To operate a business in Tokelau, companies must register with the Tokelauan government and obtain any necessary licenses and permits.
- Businesses must also file an annual tax return and pay any tax due by June 30th of each year.
VAT / Sales Tax
- The standard VAT rate in Tokelau is 15%, which applies to most goods and services.
- A reduced rate of 5% applies to certain essential items, such as food and medicine.
- Certain goods and services, such as financial services and education, are exempt from VAT.
- There are no tourist refund schemes in place, so visitors are not eligible for VAT refunds on purchases made in Tokelau.
For Expats & Foreign Workers
- To be considered a tax resident in Tokelau, an individual must be physically present in the territory for at least 183 days in a calendar year.
- Tokelau has double taxation treaties with over 40 countries, including New Zealand, to prevent double taxation of income.
- Expats and foreign workers may be eligible for certain social security benefits, such as healthcare and education benefits.
- Individuals must report all income earned, regardless of source, to the Tokelauan tax authorities.
- Expats and foreign workers may be subject to remittance rules, which require them to remit a portion of their income to the Tokelauan government.
- It's also important for expats and foreign workers to understand their tax obligations in their home country, as well as in Tokelau.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to tax in Tokelau.
- Capital gains are included in income and subject to tax at the individual's marginal tax rate.
- Cryptocurrency is considered a form of property and is subject to tax on any gains made from its sale or exchange.
- Tokelau has not introduced any specific regulations or taxes on cryptocurrency, but it is subject to the same tax rules as other forms of investment income.