Establishing payroll internationally requires navigating various legal requirements and considerations that can be challenging. Globalization Partners offers the resources to help you efficiently set up Timor-Leste payroll and ensure full compliance with...
Read MoreEstablishing payroll internationally requires navigating various legal requirements and considerations that can be challenging. Globalization Partners offers the resources to help you efficiently set up Timor-Leste payroll and ensure full compliance with local governance.
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Establishing payroll internationally requires navigating various legal requirements and considerations that can be challenging. Globalization Partners offers the resources to help you efficiently set up Timor-Leste payroll and ensure full compliance with local governance.
According to the nation’s 2012 Labour Code, Wage Income Taxes are to be paid by the employer and deducted from employee payments. Annual taxable income under $6,000 has no tax withholding requirements for residents, but any yearly income over that amount is subject to a 10 percent tax. This income is taxable regardless of whether payments are made in cash. Non-residents must pay a flat rate of 10% on any Timor-Leste sourced taxable income.
Employers are required to withhold Wage Income Taxes monthly and provide an annual return by the last day of February for each tax year.
The following wages are exempt from Wage Income Taxes:
Companies have several Timor-Leste payroll options. Carefully assess your company’s requirements as you decide on the best choice for your budget, operational needs, and logistics. Some standard options global companies use include:
You can terminate a contract with an employee without prior notice under just cause. The following employee behaviors qualify as reasonable grounds for termination:
Suppose you must terminate a contract due to redundancy, a market change, or another similar situation. In that case, you are required to notify all affected workers and carry out negotiations with them regarding the rescission of their contract. If maintaining the contract is impossible, the law stipulates that you must provide 15 days’ notice for employees who have worked at your company for fewer than two years. The law requires at least 30 days’ notice for employees who have worked for you for more than two years.
Should the worker be reinstated after rescission due to a court ruling or circumstantial change, they may be entitled to compensation. In any case of termination, you are responsible for compensating employees with one month’s salary for each period of five years they’ve worked for you.
For trusted Timor-Leste payroll outsourcing, work with Globalization Partners as your Employer of Record. We’ll manage payroll for you so you can focus on your other business priorities. Contact us today to learn more.
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