TIMOR-LESTE Law and Practice Contributed by: João Afonso Fialho, Tomás Cabral Anunciação and Teófilo de Jesus, VdA
4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes The Mining Code sets out a special tax regime for holders of mineral rights (without prejudice to the general tax regime that applies to any entity in Timor-Leste, namely, corporate income tax). No distinction is made between taxing domestic and foreign parties. Royalty The rates for mining royalties, calculated on the value of the mineral resources, are as follows: • precious metals and minerals – 8%, if unpro - cessed, 3.5%, if processed; • common metals – 7%, if unprocessed, 2.5%, if processed; • gems – 8%, if unprocessed, 3.5%, if pro - cessed; • radioactive minerals – 8%; • rare earth minerals – 15%; and • ornamental stones – USD10 per tonne, if unprocessed, USD1 per tonne, if processed. Surface Fee The surface fee levied on the concession area is payable by all natural and legal persons carrying out mining activities. The amount payable varies in accordance with the size of the concession area, the type of mineral under exploration, the type of mining activity and the operation year in question. It can range from USD25 to USD400 per square kilometre. 4.2 Tax Incentives for Mining Investors and Projects There are no industry-specific tax incentives for holders of mineral rights, and tax stabilisation
and private national entities in projects related to clean development and emissions trading. The Designated National Authority for the Fight Against Climate Change will also liaise between Timor-Leste and the Green Climate Fund. 3.3 Sustainable Development Initiatives Related to Mining Although growing concern about sustainability is emerging in Timor-Leste (with climate change under the spotlight), there are no relevant sus - tainable development initiatives for the mining industry. 3.4 Energy-Transition Minerals There are no specific government or legislative initiatives related to the increasing demand for so-called energy transition minerals as such. However, as regards rare earth and radioactive minerals, these are classified as strategic min - erals under Decree-Law 19/2024, of 25 March, which establishes the rules for the classification and marketing of strategic minerals. This legal framework establishes special rules for the Timorese State’s participation in mining activities related to these minerals, through the national mining company in association with pri - vate companies. It also establishes special rules for their commercialisation, such as the duty to take into account the classification and evalua - tion of these minerals, their scarcity, rarity, price and the particular characteristics of the interna - tional market, in order to value these resources in the best interests of the national economy.
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