TIMOR-LESTE Law and Practice Contributed by: João Afonso Fialho, Tomás Cabral Anunciação and Teófilo de Jesus, VdA
agreements are not expressly foreseen in the law. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects Direct and indirect transfers or sales of mineral rights/mining assets (including by means of M&A operations in and/or outside the country) may trigger capital gains for the purposes of assess - ment of corporate income tax. 5. Mining Investment and Finance 5.1 Attracting Investment for Mining The Mining Code contains several provisions regarding transparency and best international practices aimed at creating a safer environment for investment in the mining industry. These pro - visions include: • the prohibition of any offers, benefits or gifts to any employee of the National Authority of Mineral Resources or their family members; and • the annual publication, by the Ministry of Petroleum and Natural Resources, of a report relating to state revenues and other direct and indirect benefits received by the state as a result of or in connection with mining activi - ties (this report must be prepared in accord - ance with the best international transparency practices). Other features that may be relevant for attracting investment are discussed below. Dispute Resolution The Mining Code regards the judicial courts of Timor-Leste and arbitration courts as the proper mechanisms to resolve any disputes arising in connection with mineral activities or disputes
related to other issues regulated in the Mining Code, in accordance with the titles that granted the corresponding mining rights. On 17 March 2021, Timor-Leste approved the accession of the country to the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. Its ratification instrument was deposited with the secretary-general of the United Nations on 17 January 2023 and the convention came into effect in Timor-Leste on 17 April 2023. As such, international arbitral awards are recognised and enforceable in Timor-Leste, without prejudice to the reservation made by the Timorese State, which limits the applicability of the convention to: • the recognition and enforcement of arbitral awards handed down in another contracting state; and • disputes arising from legal relationships of a commercial nature, whether contractual or not. Timor-Leste’s national parliament also approved Law 6/2021, of 31 March 2021, which establish - es the legal regime of voluntary arbitration and allows Timor-Leste’s competent judicial courts to recognise and enforce arbitration decisions. Early Stage of Development of the Mining Industry Mining activities have been gradually taking off in Timor-Leste and the country still has abun - dant mineral reserves to be explored and mined by potential investors, as further detailed in 6.1 Two-Year Forecast for the Mining Sector .
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