INVESTMENT CONSIDERATIONS

GOVERNMENT POLICY

The Government welcomes foreign investment and recognises the substantial contribution foreign investment can continue to make to the development of Tuvalu's industries and resources, as there is limited capacity of the domestic private sector to provide this growth.

Foreign investment proposals are dealt with on a case-by-case basis with the Government generally being accommodating regarding the terms and conditions under which overseas firms can operate.

RESTRICTIONS ON FOREIGN INVESTMENT

The only restriction is the availability of land that can only be leased by non-natives, and then only with the approval of the Minister of Natural Resources.

REPATRIATION OF CAPITAL AND PROFITS

Approval to repatriate profits under the Foreign Currency Act is required from the Secretary of Finance.

TAXATION

Company Tax
Taxation of foreign resident companies is 40 percent on net profit.

Income Tax
Personal income tax is levied at a flat rate of 30 percent with a tax free threshold of US$2,220. Company tax rates on all chargeable income are also set at 30 percent. Non resident individuals are taxed at a flat rate of 40 percent of income.

Sales Tax
A variety of sales taxes are applied to different goods and services.

INVESTMENT PROTECTION

The Tuvalu Government offers the following guarantees to foreign investors who establish themselves in Tuvalu. There will be no nationalisation except:

• in accordance with law;
• for a public purpose defined by law; and
• with payment of compensation as defined by law

INVESTMENT INCENTIVES

No specific or fixed set of incentives currently exists for investment in general. In most instances incentives are granted on a case-by-case basis. Certain types of industries, including tourism, qualify for 'pioneer status' which gives them the opportunity of applying for tax exemptions. Under this category, the Minister of Finance can, at his discretion, grant exemption on tax for any concession period. Incentives are currently being reviewed to make them more attractive.

Most capital items, including plant, machinery and vehicles for newly established businesses, are exempted from duty upon application. All building materials are imported duty free.

CONTACTS FOR FURTHER INFORMATION