UNITED NATIONS    NATIONS UNIES

United Nations Transitional Administration           Transitoire des Nations Unies in East Timor                      au Timor Oriental

UNTAET

UNTAET/REG/2000/32

29 September 2000

REGULATION NO. 2000/32

TO AMEND REGULATION NOs 2000/12 AND  2000/18

The Special Representative of the Secretary-General (hereinafter: Transitional Administrator),

Pursuant to the authority given to him under United Nations Security Council resolution 1272 (1999) of 25 October 1999,

Taking into account United Nations Transitional Administration in East Timor (UNTAET) Regulation No. 1999/1 of 27 November 1999 on the Authority of the Transitional Administration in East Timor,

For the purpose of amending (UNTAET) Regulation No. 2000/12 on a Provisional Tax and Customs Regime for East Timor and Regulation No. 2000/18 on a Taxation System for East Timor,

Promulgates the following:

Section 1                           Amendment of Regulation No. 2000/18

Regulation No. 2000/18 is amended so it reads as set out in the Schedule to the present Regulation.

Section           2 Repeal of Regulation No. 2000/12

Regulation No. 2000/12 ceases to have effect when the amendments set out in Section 1 enter into force.

Section 3  Entry into force

The present Regulation shall enter into force on 29 September  2000.

Sergio Vieira de Mello Transitional Administrator

SCHEDULE

UNITED NATIONS  NATIONS UNIES

United Nations Transitional Administration          Administration Transitoire des Nations Unies

in East Timor          au Timor Oriental

UNTAET

--- 

REGULATION NO. 2000/18

UNTAET/REG/2000/18

30 June 2000

ON A REVENUE SYSTEM FOR EAST  TIMOR

The Special Representative of the Secretary-General (hereinafter: Transitional Administrator),

Pursuant to the authority given to him under United Nations Security Council resolution 1272 (1999) of 25 October 1999,

Taking into account United Nations Transitional Administration in East Timor (UNTAET) Regulation No. 1999/1 of 27 November 1999 on the Authority of the Transitional Administration in East Timor,

After consultation in the National Consultative  Council,

For the purpose of establishing a taxation and import duty regime for East Timor, Promulgates the following:

Chapter I          Interpretation

Chapter II          East Timor Revenue Service

Chapter III          Services Tax

Chapter IV          Excise Tax

Chapter V          Sales Tax

Chapter VI          Import Duty

Chapter VII          Wages Tax

Chapter VIII          Income Tax

Chapter IX          Taxes and Tax Provisions in Other Regulations

Chapter X          Taxation Procedure

Chapter XI          Additional Tax, Offences and Penalties

Chapter XII          Board of Tax and Customs Appeals

Chapter XIII          Anti-avoidance

Chapter XIV    Entry into Force

Schedule 1          Rates of Tax and Import Duty, Exemptions and Dates of  Effect

1. Interpretation

Section 1 Purposive interpretation

Where Sections in the present Regulation are capable of alternative   interpretations, the interpretation that best achieves the intended purpose of the legislation shall be adopted and any interpretation that frustrates the intended purpose of the legislation shall be rejected.

Section 2 Definitions extend to other forms of words

2.1        Definitions in the present Regulation in the singular form shall be read as applying to the plural form and definitions in the plural form shall be read as applying to the singular form as appropriate.

2.2        Definitions in the present Regulation in the masculine form shall be read as applying to the feminine form and definitions in this section in the feminine form shall be read as applying to the masculine form.

Section 3 Definitions

In the present Regulation :

“associate” in relation to a person means any other person who acts or is likely to act in accordance with the wishes of the person as a result of a connection between the persons or common ownership or control;

“Board” means the Board of Tax and Customs Appeals established under the present Regulation;

“Commissioner” means the Commissioner of the East Timor Revenue  Service;

“customs value” means the fair market value of the goods including cost, insurance and freight as determined in accordance with article VII of  GATT;

“designated service” means a service that is designated under Section 12; “designation notice” is a notice described in Section 68;

“East Timor”, when referring to a geographic area, means the territory of East Timor and its territorial waters, the economic zone off the coast of East Timor recognized under the law of the sea and, to the extent allowed by treaty or the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor Gap, in the area covered by that  Memorandum;

“employee” means:

(a)           a natural person  who is in employment in East Timor;  or

(b)           a natural person whose provision of services is substantially similar to the provision of services by a person who is in employment in  East Timor;

“employer” means a person who pays wages  to an employee  ;

“employment in East Timor” means the provision of personal services in East Timor:

(i)            in the course of an employer  and employee  relationship;

(ii)           as director of a company;

(iii)         as the holder of a public office; or

(iv)         as an official of the government of East Timor posted  overseas;

“enterprise” means:

(a)           a  person liable to pay tax under the present Regulation, other than  an

employee;

(b)           a person who carries on a business with a turnover of more than $200 per month;

(c)           a  person liable to withhold tax under the present  Regulation;

(d)           a religious institution or organization as designated by the  Commissioner

in a designation notice with a turnover of more than $200 per month;  or

(e)           a charitable or non-profit institution or organization as designated by the Commissioner in a designation notice with a turnover of more than $200 per month;

“ETRS” means the East Timor Revenue Service;

“exempt wages” means amounts specified in paragraph (a) of Part B of Section 5 of Schedule 1;

“goods” means any substance, organism, article or thing, whether manufactured or natural, which is not a human body, cadaver or human  remains;

“harmonized classification system” means the commodity classification system established by the World Customs Organization;

“hotel services” means the provision of sleeping accommodation and related services, including the provision of meals, beverages, laundry and communications services, to persons who occupy such accommodation as transient guests;

"Law on Income Tax" means the Law on Income Tax applicable in East Timor under Regulation No. 1999/1;

“officer of the Border Service” means  the Border Service Controller or a  person

employed by the Border Service and acting under the authority of the  Controller;

“person” means:

(a)           a natural person, including a sole trader;

(b)           a company, wherever incorporated, or other juridical  person;

(c)           a partnership, wherever formed;

(d)           a trust, wherever established; or

(e)           any other unincorporated association or body of  persons;

“restaurant and bar services” means the provision of food or beverages by an establishment that provides facilities for immediate consumption at that establishment, or catering services of prepared food, but not including the provision of food or beverages that is considered part of hotel  services;

“sales tax exemption form” means the form described in Section 26; “sales tax value” means:

(a)           for imported taxable goods, the customs value of goods increased by  any import duty and excise tax payable on the importation of the  goods;

(b)           for taxable goods sold in East Timor, the price of the goods not including any sales tax; and

(c)           for taxable services provided in East Timor, the price of the service not including any sales tax;

“tax form” means:

(a)           an annual wage income tax withholding information  form;

(b)           an excise tax form;

(c)           a sales tax form;

(e)           a services tax form;

(f)            a wage income tax withholding form; or

(g)           any forms prescribed by the Commissioner under Section  45.1(c);

“tax year” means the 12 month period from 1 January to 31  December;

“telecommunications services” means the provision of telephonic services by a telecommunications service provider, including digital or analogue telephone, facsimile or data transfer communications; and

“wages” means any reward for services provided by an employee to an employer, including:

(a)           any salary provided to the employee , including leave pay, overtime payments, commissions, and bonuses;

(b)           director’s fees;

(c)           the value of gifts provided by an employer to an  employee;

(d)           the market value of any benefit provided by an employer to an  employee;

(e)           any allowance provided by the employer for the benefit of an  employee;

(f)            any payment provided by the employer in respect of loss or termination of employment;

(g)           any payments however described made on termination of employment in respect of entitlements outstanding at the time of  termination;

(h)           the value determined by the Commissioner of the provision by the employer to an employee of the use of a motor vehicle wholly or partly for private purposes of the employee;

(i)            the value determined by the Commissioner of the provision by  the

employer  of accommodation or housing;

(j)            the reimbursement or discharge by an employer of any expense of  the

employee  including utilities expenses;

(k)           the value determined by the Commissioner of the provision by an employer to an employee of a housekeeper, driver, guard, gardener, or other domestic assistant;

(l)            the cost to the employer of providing an employee with any meal, refreshment, or entertainment except in the course of providing a good or service for the employer where the Commissioner considers that the cost of provision for the employer is reasonable;

(m)         the amount of any reimbursement or discharge by an employer of  an

employee’s medical expenses; and

(n)           the amount of any waiver where any employer waives an obligation of  the

employee to pay an amount owing to the employer.

1. East Timor Revenue Service

Section 4 Creation of the East Timor Revenue Service

4.1        There shall be established as a separate office within the Central Fiscal Authority an East Timor Revenue Service (hereafter referred to as  “ETRS”).

4.2        The ETRS shall be headed by a Commissioner who shall be appointed by the Transitional Administrator, after consultation with the National Council, and on advice of the Head of the Central Fiscal Authority, for a period of one  year.

4.3        Pending appointment of a Commissioner for the period set out in Section 4.2, the Transitional Administrator may appoint an Interim Commissioner for a shorter  period.

4.4        The Commissioner or Interim Commissioner may be dismissed prior to expiry of the term of appointment only by the Transitional Administrator after consultation with  the National Council.

4.5        The Commissioner shall be assisted by Deputy Commissioners who shall be appointed by the Transitional Administrator.

4.6        No person shall seek to interfere in any aspect of the operation of the revenue collection process or influence the Commissioner or an officer of the ETRS in carrying  out responsibilities under the present Regulation, and the Commissioner shall report such cases directly to the Transitional Administrator.

Section 5 Powers of the Commissioner

In addition to those specifically granted elsewhere in the present Regulation, or any other UNTAET Regulation, the Commissioner shall  have:

(a)           the duty to enforce provisions of the present Regulation and to collect all taxes, duties and fees levied:

(i)            by the present Regulation; and

(ii)           under the authority of Regulation No.  1999/1;

(b)           the duty to prepare advertisements, notices, and other communications to ensure all persons understand their obligations and rights under the present Regulation;

(c)           the power to appoint such persons as may be required to carry out the provisions of the present Regulation in conformity with the Public Service Commission rules and regulations; and

(d)           the power to establish an organizational structure within the  ETRS appropriate for its functions.

Section 6 Delegation power

6.1          The Commissioner may:

(a)           delegate to any officer of the ETRS any power or duty conferred or imposed on the Commissioner by the present Regulation other than this power of delegation;

(b)           direct that any information, form, or document required to be given to the Commissioner shall be given to another person nominated   by the Commissioner; and

(c)           delegate to the Border Service Controller all duties and rights appropriate for the collection of:

(i)            import duty;

(ii)           excise tax;

(iii)         sales tax on imported goods; and

(iv)         tax on coffee exports.

6.2          The Commissioner may revoke any of the powers delegated under Section 6.1 at any time.

Section 7 Rules governing Revenue Service

7.1          The Commissioner shall select and promote officers through the Public Service Commission and according to its rules.

7.2          All officers of the ETRS shall wear an official ETRS identification card while conducting business.

Section 8 Reporting

8.1        The Commissioner shall produce an annual report of the operations of the ETRS and deliver the report to the Head of the Central Fiscal Authority as soon as practicable after the end of each tax year.

8.2        The Commissioner’s annual report shall be provided to the Transitional Administrator and made available to the  public.

8.3          The Commissioner’s annual report shall  include:

(a)           details of the budget of the ETRS;

(b)           details of the number and level of staff of the ETRS;

(c)           details of the revenues collected by the ETRS showing details of the amount of revenue from each type of tax and each district and such other details that may be requested by the Head of the Central Fiscal  Authority;

(d)           estimates of the cost of collection for each type of tax revenue  collected;

(e)           details of all tax liabilities cancelled under section 61, including the names of the persons whose liability has been cancelled and the amount  cancelled;

(f)            details of all prosecutions for offences described under Chapter XI, including the names of the persons who were convicted and the amounts of tax involved; and

(g)           information on the use of the powers authorized by Section 63, including the number and nature of any complaints about the use of those powers, but not including the names of the persons involved.

8.4        The Head of the Central Fiscal Authority shall present to the Transitional Administrator a copy of the annual report within one month of receiving the  report.

1. Services Tax

Section 9 Imposition of tax

Services tax at the rates set out in Part A of Section 1 of Schedule 1 is imposed on the gross consideration received by a person for the provision of designated services in East Timor on or after 1 July  2000.

Section 10 Monthly turnover

A person’s monthly turnover from the provision of designated services includes the monthly turnover of any associate of the person in respect of the same designated services.

Section 11 Gross Consideration

The gross consideration received by a person for the provision of designated services includes:

(a)           all amounts received by that person in respect of the provision of

designated services;

(b)           all amounts received by that person in respect of any other service or good where the cost to the user of a designated service of that designated  service is reduced or eliminated by the amount paid in respect of the other service or good.

Section 12 Designated services

Each of the following is a designated service:

(a)           hotel services;

(b)           restaurant and bar services;

(c)           telecommunications services; and

(d)           rental services of:

(i)            cars, trucks, omnibuses, motorcycles and similar motorized land vehicles;

(ii)           helicopters and airplanes; and

(iii)         seagoing vessels.

Section 13 When telecommunications services are provided in East Timor

13.1     A telecommunications service is provided in East Timor if the telecommunication originates in East Timor.

13.2     A person providing a telecommunications service in East Timor is the person who operates and maintains the system for transmitting the telephonic  signals.

Section 14 When rental services are provided in East Timor

A rental service is provided in East Timor if the vehicle, aircraft or vessel is made available for use in East Timor.

Section 15 Payment of tax and services tax form

15.1     A person providing designated services in East Timor who is liable to pay services tax shall deliver to the Central Payments Office or its nominated agent by the fifteenth day after the end of a calendar month:

(a)           a completed services tax form as prescribed by the Commissioner;  and

(b)           any services tax payable on gross consideration received by the person for the provision of designated services in that  month.

15.2     A person who has had a liability to pay services tax under the present Regulation in respect of any month shall deliver to the Central Payments Office or its nominated  agent a completed services tax form for subsequent months whether or not services tax is payable in subsequent months.

15.3     The Commissioner may waive the requirement set out in Section 15.2 upon written application by a person required to deliver a services tax form under that Section if the Commissioner is satisfied the person will not have a liability to pay services tax in the relevant months.

Section 16 Timor Gap

This Chapter is not applicable to matters covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor  Gap.

1. Excise Tax

Section 17  Imposition of excise tax

17.1       Excise tax is imposed on the importation into East Timor or the production  in

East Timor of goods subject to excise tax on or after 20 March  2000.

17.2       Subject to Section 20 and Section 21, a person who:

(a)           produces in East Timor; or

(b)           imports into East Timor

goods subject to excise tax is liable to pay excise tax of the amount set out in Part A of Section  2 of Schedule 1 on the production or importation of the  goods.

Section 18 Payment of tax

18.1     A person producing goods on which excise tax is payable shall deliver to the Central Payments Office or its nominated agent by the fifteenth day after the end of a calendar month:

(a)           a completed excise tax form as prescribed by the Commissioner;  and

(b)           any excise tax payable on goods produced during that calendar  month.

18.2     The Commissioner may prescribe in a designation notice procedures for the payment of excise tax payable on imported  goods.

18.3     A person who has had a liability to deliver excise tax under Section 18.1 in respect of any month shall deliver to the Central Payments Office or its nominated agent  a completed excise tax form for subsequent months whether or not excise tax is payable in subsequent months.

18.4     The Commissioner may waive the requirement set out in Section 18.3 upon written application by a person required to deliver an excise tax form under that  Section.

Section 19 Time of production

For the purpose of Section 18.1(b), a good is produced at the earliest of the  time

it:

(a)           is available for sale or consumption; or

(b)           is sold.

Section     20 Goods subject to excise tax

20.1     The goods set out in the following Table, other than goods listed in Section 20.2 and in Part B of Section 2 of Schedule 1, are subject to excise  tax:

20.2  The following goods imported into or produced in East Timor are exempt from excise tax:

(a)           goods exported from East Timor within 28 days of production or importation, provided the person liable to pay excise tax delivers to the Central Payments Office or its nominated agent proof that the goods have been exported; and

(b)           goods covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor  Gap.

20.3  The Commissioner may extend the 28 day period provided in Section 20.2(a) upon written application by an exporter where the Commissioner has determined  that:

(a)           circumstances beyond the control of the exporter have prevented or will prevent the exportation within 28 days of production or importation of goods to which the section applies; or

(b)           due to some nature of the goods or the arrangements under which the export is to take place, it is not practicable to export goods to which the section applies within 28 days of production or importation of the  goods.

20.4  Evidence will only be accepted as proof of export for the purpose of Section 20.2(a)  where it is:

(a)        certified as correct by an officer of the Border Service;  and

(b)           delivered to the Central Payments Office or its nominated agent within 28 days of production or importation of goods for which exemption from excise tax is claimed.

Section 21 No double taxation

21.1     No excise tax is payable on tobacco products, alcoholic products, soft drinks or flavored water produced for consumption in East Timor to the extent that excise tax has previously been paid on the ingredients used to produce these goods by the producer or another person.

21.2     A person claiming exemption from liability to pay excise tax under Section 21.1 shall deliver to the Central Payments Office or its nominated agent a completed excise tax exemption form by the fifteenth day after the end of a calendar  month.

21.3     A form delivered under Section 21.2 must be accompanied by copies of receipts showing excise tax has been paid on the ingredients used to produce the tobacco, alcohol, soft drinks or flavored water product for which exemption has been  claimed.

1. Sales Tax

Section 22   Imposition of sales tax

22.1     Sales tax at the rates set out in Part A of Section 3 of Schedule 1 is imposed on the sales tax value of:

(a)           taxable goods that are imported into East Timor on or after 20 March 2000;

(b)           taxable goods sold in East Timor on or after the date specified in Part C of Section 3 of Schedule 1; and

(c)           taxable services that are provided in East Timor on or after the date specified in Part C of Section 3 of Schedule  1.

22.2     Subject to Section 22.3, the following persons are liable for sales tax imposed under Section 22.1:

(a)           a person who imports taxable goods into East  Timor;

(b)           a person who sells taxable goods in East Timor;  and

(c)           a person who provides taxable services in East Timor.

22.3     A person is liable to pay sales tax on taxable goods sold and taxable services provided in a month if the person’s monthly turnover from the sales and provision of services in that month exceeds the monthly sales tax threshold described in paragraph (b)(ii) of Part B of Section 3 of Schedule 1.

Section 23 Monthly turnover

A person’s monthly turnover from the sale of taxable goods or the provision of taxable services includes the monthly turnover of any associate of the person from the sale of taxable goods or the provision of taxable  services.

Section 24 Payment of tax

24.1     A person who is liable to pay sales tax on goods sold in East Timor or services provided in East Timor shall deliver to the Central Payments Office or its nominated agent by the fifteenth day after the end of a calendar month:

(a)           a completed sales tax form as prescribed by the  Commissioner;

(b)           any completed sales tax exemption forms received by the person during that calendar month; and

(c)           any sales tax payable on goods sold or services provided during that calendar month.

24.2     The Commissioner may prescribe in a designation notice procedures for the payment of sales tax payable on imported goods.

24.3     A person who has had a liability to deliver sales tax under Section 24.1 in respect of any month shall deliver to the Central Payments Office or its nominated agent a completed sales tax form for subsequent months whether or not sales tax is payable in subsequent months.

24.4     The Commissioner may waive the requirement set out in Section 24.3 upon written application by a person required to deliver a sales tax form under that  Section.

Section 25 Taxable and exempt goods and services

25.1     Subject to this Section, the following goods and services are subject to sales  tax:

(a)           all goods imported into East Timor, other than goods exempt from import duty under paragraph (a) of Part B of Section 4 of Schedule  1;

(b)           all goods sold in East Timor, other than goods exempt under paragraph (b)(i) of Part B of Section 3 of Schedule 1;  and

(c)           all services provided in East Timor, other than services exempt under paragraph (b)(i) of Part B of Section 3 of Schedule  1.

25.2     Goods imported into East Timor are exempt from sales tax if the person importing the goods provides the Border Service with a completed sales tax exemption form.

25.3       Goods sold in East Timor are exempt from sales tax if the person acquiring  the

goods provides the person selling the goods with a completed sales tax exemption  form.

25.4     Services provided in East Timor are exempt from sales tax if the person acquiring the services provides the person providing the services with a completed sales tax exemption form.

25.5     This Chapter does not apply to goods covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor  Gap.

Section 26   Sales tax exemption forms

26.1     The Commissioner shall provide a sales tax exemption number to a person who requests the number if the Commissioner is satisfied the person will be liable to pay sales tax in respect of sales of taxable goods or the provision of taxable services made by that person.

26.2     A person who imports goods into East Timor or who acquires goods or services in East Timor may provide the Border Service or person supplying the goods or services  with a completed sales tax exemption form .

26.3     A completed sales tax exemption form shall be provided in a format approved by the Commissioner and must contain the following  information:

(a)           an affirmation that the goods imported or the goods or services acquired for which the form is submitted will be applied by the importer or person acquiring the goods or services only:

(i)            to make sales of taxable goods or to provide taxable services;  or

(ii)           to make sales of goods that would be taxable or to provide services that would be taxable if the person acquiring the goods or services had not provided the person supplying the goods or services with a completed sales tax exemption form; and

(b)           the sales tax exemption number of the person providing the  form.

1. Import Duty

Section 27      Imposition of import duty

27.1     Subject to Section 27.2, a person who imports goods into East Timor on or after 20 March 2000 other than goods exempt from import duty under Part B of Section 4 of Schedule 1 is liable to pay import duty on the imported goods at the rate set out in Part A of Section 4 of Schedule 1.

27.2     This Chapter does not apply to imports covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor  Gap.

1. Wages Tax

Section 28 Imposition of a wages income tax

A wage income tax is imposed on persons who have received wages in respect of employment in East Timor on or after the date specified in Part C of Section 5 of  Schedule 1, other than from:

(a)   exempt wages; and

(b)   wages received in the territory covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor,  and the Government of Australia on arrangements relating to the Timor  Gap.

Section 29 When employees treated as having provided tax identification  numbers

The Commissioner may designate by way of designation notice those employees that will be treated as having provided their employers with the tax identification numbers of the employees.

Section 30 Withholding obligation

A person providing wages, other than exempt wages, in respect of employment in East Timor shall withhold from those wages wage income tax, using tables provided by the Commissioner for that purpose which take into account the rates specified in Part A  of Section 5 of Schedule 1 and any amounts specified in paragraph (b) of Part B of Section 5 of Schedule 1.

Section 31 Delivering tax and wage income tax withholding form

31.1     A person withholding wage income tax under Section 30 shall deliver to the Central Payments Office or its nominated agent by the fifteenth day after the end of a calendar month:

(a)           a completed wage income tax withholding form as prescribed by  the

Commissioner; and

(b)           any wage income tax withheld in that month.

31.2     A person who has had a liability to deliver wage income tax withheld under this Section in respect of any month shall deliver to the Central Payments Office or its nominated agent a completed wage income tax withholding form for subsequent months whether or not wage income tax has been withheld in subsequent  months.

31.3     The Commissioner may waive the requirement set out in Section 31.2 upon written application by a person required to deliver under that  Section.

31.4     A person who has withheld wage income tax under Section 30 shall deliver to the Central Payments Office or its nominated agent a completed annual wage income tax withholding information form as prescribed by the Commissioner by the thirtieth day  after the end of the tax year.

Section 32 Providing information to employees

A person withholding wage income tax under Section 30 shall provide all persons whose wages have been subject to wage income tax under Section 31.2 who so request with a completed wage income tax withheld form as prescribed by the Commissioner 21 days after the end of the tax year or after termination of employment in the course of a   tax year.

Section 33 Withholding extinguishes an employee’s tax liability

33.1     An employee who receives wages that have been correctly subject to wage income tax has no further liability with respect to wage income tax imposed on those  wages.

33.2     Where an employee receives wages that have not been correctly subject to wage income tax withholding the Commissioner may make an assessment of any additional wage income tax owed by the employee or refund any overpayment in accordance with Section 51.7.

33.3     Wage income tax assessed by the Commissioner under Section 33.2 is due and payable one month after the date on which the person assessed receives notice of the assessment.

33.4     A person assessed under Section 33.2 shall deliver payment of the tax assessed to the Central Payments Office or its nominated  agent.

1. Income Tax

Section 34 Modifications to the Law on Income Tax

34.1       Subject to Section 34.2, the provisions of the Law on Income Tax operate subject to modifications set out in the present Regulation.

34.2       This Chapter does not apply to the territory covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor Gap.

Section 35 Tax year

For the purposes of this Chapter, the words “tax year” wherever they appear in the Law on Income Tax shall be read as referring to the 12 month period from 1 January to 31 December.

Section 36 Tax on Coffee Exports

36.1     Every exporter of coffee beans, whether processed or unprocessed, shall pay at the time of export on or after 20 March 2000 a tax on the export value of those coffee beans at the rate set out in Part A of Section 6 of Schedule  1.

36.2     The export value of coffee beans is the arm's length free on board value of the beans.

36.3     Using the harmonized classification system, the owner, exporter or licensed customs broker shall present all relevant documentation on all exported coffee beans to an officer of the Border Service.

36.4     Any income tax imposed under the Law on Income Tax shall be reduced by tax imposed under this Section for the tax year commencing 1 January 2001 and for all subsequent tax years.

Section 37 Wages only subject to tax under Chapter VII

Article 4(1)(a) of the Law on Income Tax does not apply to wages received or accrued in the 2001 tax year and subsequent tax  years.

Section 38 Withholding tax changes

38.1     Withholding tax rates under the Law on Income Tax shall be reduced to zero for the period 1 January 2000 to 31 December 2000.

38.2     Taxes withheld under the Law on Income Tax shall not be final taxes but shall be deducted from tax payable by the recipient of the payments described in that  law.

38.3     Income that, but for this section, would have been subject to withholding tax  under the Law on Income Tax, shall be subject to income tax at the rates set out in Part A of Section 6 of Schedule 1.

Section 39 Transitional exempt income

Article 4(3) of the Law on Income Tax shall be read with the following additional paragraphs:

(k)           any other income derived between 25 October 1999 and 31 December 1999;

(l)            in respect of the 2000 tax year, the lesser of:

(i)          the taxable income of the taxpayer for that tax year; or (ii)          $20,000;

provided no associate of the taxpayer excludes income from Income Tax Objects under this paragraph.

Section 40

Suspension of calculation norms and special calculation norms

Articles 14 and 15 of the Law on Income Tax do not apply to the 2000 tax  year

and subsequent tax years.

Section 41

Restriction on carried-forward amounts

41.1       Any credits for taxes paid or entitlements to refunds of tax for any reason that existed on 25 October 1999 shall be treated as nil on that date.

41.2       Losses calculated under Article 6(2) of the Law on Income Tax shall be treated as nil on 31 December 1999.

Section 42 Delivery of returns

42.1     The following persons are required to deliver to the Central Payments Office or its designated agent a completed income tax form as prescribed by the Commissioner at the time designated by the Commissioner in a designation  notice:

(a)           a person who is required to pay income tax under the present Regulation; and

(b)           other persons or classes of persons as designated by the Commissioner in a designation notice.

42.2     No provision other than Section 42.1 shall require a person to deliver an income tax form.

Section 43 Administrative discretion

Where records needed by taxpayers to comply with the provisions of the present Regulation or the Law on Income Tax are unavailable because of damage or destruction, the Commissioner may determine on a reasonable basis any amounts that would have been calculated by reference to any other available  information.

1. Taxes and Tax Provisions in Other Regulations

Section 44 Tax provisions in other legislation not of effect

No taxes or duties have effect in East Timor unless they are contained in or authorized by the present Regulation.

Section 45 Modification of taxation laws to which Regulation No. 1999/1 applies

45.1       In all taxation laws to which Section 3.1 of Regulation No. 1999/1  applies:

(a)           references to government authorities shall be read as references to appropriate East Timor authorities;

(b)           references to government institutions and bodies shall be read as references to appropriate East Timor institutions and  bodies;

(c)           references to forms shall be read as references to forms designated by  the

Commissioner as forms for the purposes of the forms referred  to;

(d)           references to Indonesian rupiah shall be read as references to the closest equivalent U.S. dollar amount calculated using the rate of US $1 = Rp 7,422; and

(e)           references to a country other than East Timor shall be read as references  to

East Timor.

45.2       Section 45.1, other than paragraph (d), has effect from 25 October  1999.

45.3       Section 45.1(d) has effect from 1 January 2000.

45.4       Subject to Section 45.5, all laws which have effect under Regulation No. 1999/1 and which:

(a)           impose:

(i)            duties; or

(ii)           taxes other than income tax; or

(b)           establish procedures for the collection of such duties or taxes;

cease to be of effect in East Timor after 25 October 1999, but only in so far as they apply to duties or taxes other than income tax.

45.5     Section 45.4 does not apply to the territory covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor  Gap.

45.6     Subject to Section 45.7, where a provision of a law which has effect under Regulation No. 1999/1 and a provision of the present Regulation apply to the same matter, the provision of the law which has effect under Regulation No. 1999/1 will not apply.

45.7     Section 45.6 does not apply to the territory covered by the Memorandum of Understanding dated 10 February 2000 between UNTAET, acting on behalf of East Timor, and the Government of Australia on arrangements relating to the Timor Gap in respect of the application of the Law on Income Tax.

Section 46 Application of the present Regulation to Regulation No. 2000/12

Cross-references in the present Regulation to other sections in this Regulation shall be read as references to predecessor sections in Regulation No. 2000/12 where appropriate.

Section 47 Conflict of laws

Where the provisions of any previous Regulation conflict with the provisions of the present Regulation, the provisions of the present Regulation shall  prevail.

1. Taxation Procedure

Part A          Tax identification numbers

Section 48 Who must obtain a tax identification number

48.1     All enterprises are required to obtain a tax identification number.

48.2     A person not required to obtain a tax identification number under Section 48.1 may request the Commissioner to provide that person with a tax identification  number.

Section 49 Issuance of tax identification numbers

49.1     The Commissioner shall prepare a register of all persons who request a tax identification number under the present Regulation and assign a tax identification number to each person on the register with required proof of  identity.

49.2     The Commissioner may designate by way of a designation notice what documentation or other proof is required to obtain a tax identification  number.

49.3     The Commissioner shall notify every person on the register in writing of the tax identification number assigned to that person.

49.4     The Commissioner may require a person to include the tax identification number issued by the Commissioner to that person in any form, notice, or other document used for the purposes of the present  Regulation.

49.5     The Commissioner shall designate by way of a designation notice procedures to be followed for application for a tax identification number.

Section 50 Requirement for a tax identification number

The Commissioner may designate by way of a designation notice documents or registrations including but not limited to a licence, permit, passport, registration certificate as documents or registrations requiring presentation of a tax identification number prior to its issue.

Part B          Assessments

Section 51 Commissioner’s assessments of tax due

51.1     Where a person has delivered a tax form required under the present Regulation, the tax due if any according to the tax form shall be treated as an assessment of tax payable under the present Regulation.

51.2       Where the Commissioner believes that the information provided on a tax  form

does not correctly disclose the tax due, the Commissioner may determine the amount  of

51.3     Where a person has not delivered a tax form required under the present Regulation, the Commissioner may determine the amount of the tax due and issue to the person liable for payment of the tax an assessment notice for the amount  due.

51.4     Tax specified in an assessment notice issued under Section 51.3 is treated as due and payable on the date a tax form correctly disclosing the tax due was to be delivered to the Central Payments Office.

51.5       The Commissioner may amend an assessment notice issued under this  Section.

51.6     Where a person has delivered a tax form required under the present Regulation, or has received an assessment notice under this Section, and that person believes that the tax form or assessment is now incorrect, they can either deliver an amended tax form, or request the Commissioner to amend the assessment.

51.7     Where as a result of the Commissioner agreeing to amend an assessment or where an overpayment of tax has arisen, the Commissioner shall to the extent there has been an overpayment:

(a)           apply that overpayment against any other taxes then due;  and

(b)           refund the remainder to the person who paid it.

51.8     Where tax that has been overpaid by a person is dealt with under Section 51.7, the Commissioner shall pay to the person interest at the rate prescribed by the Head of the Central Fiscal Authority from the day of payment by the person to the day of  refund.

Section       52 Time limits for assessments

52.1     Subject to Section 52.2, the Commissioner shall issue an assessment notice or amend an assessment notice only within five years of the date on which the tax form to which the notice relates was due.

52.2       The Commissioner may make or amend an assessment at any time  where:

(a)           a person with the intent of evading tax has failed to deliver a tax form;

(b)           a person with the intent of evading tax has delivered a tax form which the Commissioner considers to be incorrect;  or

(c)           fraud has been committed by or on behalf of a person in relation to tax due.

Section 53 Jeopardy assessments

Where the Commissioner believes that the collection of tax that will become due is in jeopardy because a person is about to depart from East Timor, to cease business, or to transfer property, or is in jeopardy for other reasons, the Commissioner may at any time issue an assessment notice for any tax period in the current or preceding tax  year.

Part C          Tax collection

Section 54 Tax that is due and payable

54.1     Tax that is due and payable is a debt owed to the Transitional  Administration.

54.2     Officers of the ETRS are prohibited from receiving amounts under Section 54.1 unless designated to do so by the  Commissioner.

54.3     Tax that has not been paid when it is due and payable, may be sued for and recovered in a court of competent jurisdiction by the Commissioner in his official name on behalf of the Transitional Administrator.

54.4     In any suit under this section, production of a certificate signed by the Commissioner giving the name and address of the defendant and the amount of tax, and additional tax, if any, due shall be sufficient evidence of the amount of tax, and additional tax for the court to give judgement for that amount.

Section 55 Tax lien

55.1     If a person liable to pay tax fails to pay tax by the due date, the amount owing and interest creates a lien in favour of the Commissioner on all property belonging to the person, and has priority as against all other rights, except as otherwise provided in this Section and in any other UNTAET Regulation.

55.2     The lien described in Section 55.1 arises at 5 p.m. on the due date and continues until the liability is satisfied or becomes unenforceable by reason of lapse of  time.

55.3       The lien imposed by this Section is not valid against the interest  of:

(a)           a person who is a purchaser from the person who has failed to pay  tax;

(b)           the holder of a security interest granted by the person who has failed to pay tax; or

(c)         other lien holder specified in a Directive; where the interest:

(d)           arose in an arm's length transaction between the person who has failed to pay tax and the other person referred to in this  subsection;

(e)           arose before such other person had actual knowledge of the lien;  and

(f)            arose before notice of the lien has been filed in the manner specified in a Directive.

55.4     The Commissioner may designate by way of a designation notice circumstances in which the lien created by this Section is not valid as against certain persons even though notice of the lien has been filed.

55.5     The Commissioner may file a civil action in a court of competent jurisdiction to enforce the lien imposed by this Section.

Section 56 Recovery from agent of non-resident

56.1     The Commissioner may, by notice in writing, require a person who is in  possession or control of assets belonging to a non-resident person to pay tax or additional tax on behalf of the non-resident, up to the amount of tax  due.

56.2     The master of any ship or the captain of any aircraft or the manager of any property owned, chartered or leased by a non-resident person shall be treated as the person in possession of the property for the purposes of this  Section.

56.3     A person making a payment of tax or additional tax under this Section shall be treated as having made the payment on behalf of the person liable to pay the tax and the person liable to pay the tax may not seek to recover that amount from the person making payment.

Section 57 Partnerships, associations and other organizations

57.1     The Commissioner may recover from any of the partners of a partnership any tax or additional tax due from the partnership.

57.2     The Commissioner may recover from any member, manager or director of an unincorporated association or organization any tax or additional tax due from the association or organization.

57.3     A member of an unincorporated association or organization shall be liable to pay tax due under Section 57.2 only to the extent the member knew or reasonably should have known of the tax liability of the association or  organization.

57.4     Where the director or manager of a company or juridical person has caused the company or juridical person to be unable to pay any tax or additional tax due from the company under the present Regulation, the Commissioner may recover these amounts from the director or manager.

Section 58 Recovery of tax from a person owing money to the person owing tax

58.1     Where tax or additional tax due under the present Regulation has not been paid by the due date, the Commissioner may by notice in writing require a  person:

(a)           owing money to the person liable to pay tax or additional  tax;

(b)           holding money for the person liable to pay tax or additional tax;  or

(c)           having authority from some other person to pay money to the  person

liable to pay tax or additional tax;

to pay the money to the Central Payments Office or its nominated agent on the dates set out in the notice, up to the amount of tax or additional tax  due.

58.2       A copy of a notice issued under Section 58.1 shall be forwarded to the  person

liable to pay tax or additional tax.

58.3     A person making a payment under a notice under Section 58.1 shall be treated as having made the payment on behalf of the person liable to pay the tax or additional tax and the person liable to pay the tax or additional tax shall not bring an action against the person making payment for recovery of that  amount.

58.4     The Commissioner shall reduce the amount of tax or additional tax owing by the person liable to pay them, by the amount of any payment made on that person’s behalf under Section 58.3.

Section 59 Jeopardy orders

Where the Commissioner believes payment of tax that will become due is at risk because a person is about to depart from East Timor, to cease business, or to transfer property, or is in jeopardy for other reasons, the Commissioner may notify any  person:

(a)           owing money to the person who will be liable to pay tax;

(b)           holding money for the person who will be liable to pay tax;  or

 (c)           having authority from some other person to pay money to the person who will be liable to pay tax;

to set aside the money until such time as the Commissioner issues a notice under Section 53 or withdraws the notice issued under this Section.

Section 60 Departure prohibitions

60.1     If the Commissioner informs the Border Service Controller by letter that a person liable for tax due under the present Regulation has failed to pay the tax, the Border Service Controller shall prevent that person from leaving East Timor for a period of 72 hours from issuance of the letter, unless the person:

(a)         makes payment in full; or

(b)           makes an arrangement satisfactory to the Commissioner for the payment of the tax.

60.2     Upon application by the Commissioner, a court of competent jurisdiction may extend the 72-hour period referred to in Section 60.1.

Section 61 Cancellation of tax that cannot be collected

61.1     Where the Commissioner believes that it will be impossible to collect tax due under the present Regulation and that the liability of the person owing the tax should be cancelled, he may recommend to the Head of the Central Fiscal Authority that the tax liability be cancelled.

61.2     If the Head of the Central Fiscal Authority accepts in writing a recommendation of the Commissioner made under Section 61.1, the Commissioner shall treat the tax liability as cancelled and the tax shall no longer be due or  payable.

61.3     The Commissioner may reinstate a tax liability cancelled under Section 61.2 where the Commissioner believes it is possible to collect the  tax.

Part D          Records and investigation powers

Section    62 Creating and retaining records

62.1     A person who is liable to pay or withhold tax under the present Regulation shall create records of account suitable to determine their liability to pay or withhold  tax.

62.2     Unless otherwise authorized by the Commissioner, a person required to create records under the present Regulation shall maintain those records in an official language  of East Timor for a period of at least five years after the tax year in which the tax liability to which they relate arose.

Section 63 Access to books, records, and computers

63.1     Subject to Section 63.2 and Section 63.3, in order to enforce the provisions of the present Regulation, the Commissioner, or any officer authorized by the Commissioner in writing for this purpose:

(a)           shall have at all times and without any prior notice full and free access to any premises, place, book, record, or computer where there are reasonable grounds for concluding that access may provide the Commissioner with materials relevant to  an understatement of tax due;

(b)           may make an extract or copy from any book, record, or computer-stored information to which access is obtained under paragraph (a);

(c)           may seize any book or record that, in the opinion of the Commissioner or authorized officer, affords evidence which may be material in determining the liability of a person to tax, additional tax, or to a penalty under the present Regulation;

(d)           may retain any such book or record for as long as it may be required for determining a person's liability or for any proceeding under the present Regulation; and

(e)           may, where a hard copy or computer disk of information stored on a computer is not provided, seize and retain the computer for as long as is necessary to copy the information required.

63.2     The powers authorized by Section 63.1 shall be exercised only during ordinary business hours, unless the Commissioner determines that the collection of tax is in jeopardy and that their exercise outside ordinary business hours is necessary to protect the collection of the tax.

63.3     An officer who attempts to exercise a power under Section 63.1 shall not be entitled to enter or remain on any premises or place if, upon being requested by the occupier of the premises or place, the officer does not produce an authorization in  writing from the Commissioner showing that the officer is authorized to exercise that power under this Section.

63.4     The owner, manager, or any other person on the premises or place entered or proposed to be entered under this section shall provide all reasonable facilities and assistance for the effective exercise of power under this  Section.

63.5     A person whose books, records, or computer have been removed and retained under Section 63.1 may examine them and make copies or extracts from them during regular office hours under such supervision as the Commissioner may  determine.

63.6     The Commissioner shall designate by way of a designation notice procedures to be followed in exercising the powers authorized by Section  63.1.

63.7     Where the Commissioner has obtained access under Section 63.1 and there were no reasonable grounds for concluding that access could provide the Commissioner with materials relevant to an understatement of tax due, the owner of any materials collected may seek an order in a court of competent jurisdiction for return of the original and all copies of those materials.

Section 64 Commissioner may obtain information or evidence

64.1     Subject to Section 64.3, where necessary for the collection of information for the purpose of determining the liability of a specific person for a tax or the collection of information required for the collection of tax from a specific person, the Commissioner may, by notice in writing, require a person, whether that person is liable to pay tax or  not,

(a)           to provide to the Commissioner such information as may be required by the notice; or

(b)           to attend at the time and place designated in the notice for the purpose of being examined on oath before the Commissioner or any officer authorized by the Commissioner for this purpose, concerning the tax liability of that person or any other person, and for that purpose require such person to produce any book, record, or computer-stored information in the control of that  person.

64.2     Where the notice requires the production of documents or other records, it is sufficient if such documents or other records are described with reasonable  certainty.

64.3     This Section shall not apply to information contained in communications that may be privileged under applicable law, including but not limited to Sections 35.2 to 35.5 of Regulation No. 2000/30.

Part E          Tax forms and other documentation

Section 65 Tax forms

The Commissioner shall develop tax forms and other documentation along with clear instructions on how the forms should be  completed.

Part F          Rulings and designation notices

Section 66 Public rulings

66.1     To achieve consistency in the administration of the present Regulation and to provide guidance to persons required to pay tax or to withhold tax and to officers of the ETRS, the Commissioner may issue public rulings that explain how the ETRS shall interpret and apply the provisions of the present Regulation.

66.2       Public rulings shall be made available to the public and brought to the attention  of

persons affected by the rulings.

66.3     A public ruling issued under this Section is binding on the Commissioner in respect of any tax liability arising in respect of the period prior to withdrawal of the ruling.

66.4     A public ruling is not binding on a person liable to pay tax under the present Regulation.

Section 67 Private rulings

67.1     The Commissioner may issue a private ruling to a particular person explaining how the ETRS shall interpret and apply the provisions of the present Regulation as it applies to a particular transaction or arrangement planned by the person seeking the ruling.

67.2     A private ruling issued under this Section is binding on the Commissioner in respect of any tax liability arising in respect of the period prior to withdrawal of the ruling, but only if the person seeking the ruling has provided full and true disclosure of all aspects of the planned transaction or arrangement relevant to the tax  ruling.

Section 68 Designation notice

The Commissioner may issue a designation notice explaining any matter that  the

Commissioner has a power to designate under the present  Regulation.

Part G          Appeals

Section 69 Appeals to the ETRS

69.1     The Commissioner shall establish within the ETRS an Appeals Office responsible for considering appeals by persons who dispute a tax or additional tax liability set out in an assessment or amended assessment or who consider that a decision or assessment by the Commissioner is incorrect.

69.2     A person who wishes to make an appeal to the Appeals Office shall do so within 60 days from the date of receiving notice of the assessment, amended assessment or decision from the Commissioner which they wish to  appeal.

69.3     The Commissioner may establish procedures and forms for appeals to the Appeals Office and may designate by way of a designation notice the circumstances under which the 60 day period in Section 69.2 may be extended.

69.4       Decisions of the Appeals Office shall be delivered in writing to the  person

making an appeal.

69.5       A decision of the Appeals Office shall be the final decision of the  Commissioner

and shall be binding on the Commissioner.

69.6     A person may appeal a decision of the Appeals Office to the Board of Tax and Customs Appeals within 60 days of receiving notification of the  decision.

69.7     Where the Appeals Office has not delivered a decision within 42 days of the day on which an appeal was duly lodged with the Appeals Office, the person lodging the appeal may appeal the Commissioner’s decision directly to the Board of Tax and Customs Appeals.

Section 70 Payment of tax on appeal

70.1     Whether or not a person has lodged an appeal to the Appeals Office or to the Board of Tax and Customs Appeals, tax due under the present Regulation shall remain due and payable, and may be recovered notwithstanding that  appeal.

70.2     Where a person becomes entitled to a refund of tax following an appeal to the appeals office or Board of Tax and Customs Appeals, the Commissioner shall refund the tax and interest calculated at the rate prescribed by the Head of the Central Fiscal Authority from the day of payment by the person to the day of  refund.

1. Additional Tax, Offences and Penalties

PART A          Additional tax

Section 71 Additional tax

71.1     Additional tax imposed under this Chapter shall be a debt due to the Transitional Administrator.

71.2     The Commissioner shall give notice to a person liable to pay additional tax under this Part, of the amount to be  paid.

71.3     All sections in the present Regulation that apply to the collection of tax due shall also apply to additional tax imposed on a person.

71.4     The Commissioner may exercise discretion to forgive some or all additional tax imposed under this Chapter where an additional tax liability is imposed on a person and that person shows good reason for the person's failure to comply with a section of the present Regulation to which the additional tax liability  relates.

Section 72 Failure to deliver tax form

72.1     Subject to Sections 72.2 and 72.3, where a person who is required under the present Regulation to deliver a tax form fails to do so by the due date, that person shall be liable to additional tax of  $100.

72.2     Where the due date that any tax form required to be delivered by under the present Regulation does not fall on a business day, the due date shall be the next business day following the due date.

72.3     In order for any tax form that is required to be delivered under the present Regulation to the Central Payments Office, its nominated agent, or the ETRS to be treated as having been delivered by the due date, the Central Payments Office, its nominated agent, or the ETRS must have received that tax form by that due  date.

Section 73 Failure to deliver tax payment

73.1     Subject to Sections 73.2 and 73.3, where a person who is required to deliver tax under the present Regulation fails to deliver all or part of such tax by the due date, that person shall be liable to additional tax of fifteen percent (15%) of the amount of the tax that remains unpaid per annum, calculated on a daily basis, for the period from the due date until the date on which payment is made  and:

(a)           if failure was due to gross carelessness on the part of the person, further additional tax of twenty-five percent (25%) of the tax that remains unpaid; or

(b)           if failure was due to a deliberate attempt to avoid payment of tax, further additional tax of one hundred percent (100%) of the tax that remains unpaid.

73.2     Where the due date that any tax required to be delivered by under the present Regulation does not fall on a business day, the due date shall be the next business day following the due date.

73.3     In order for any tax that is required to be delivered under the present Regulation  to the Central Payments Office or its nominated agent to be treated as having been delivered by the due date, the Central Payments Office or its nominated agent must have received that tax by that due date.

Section 74 Understatement of tax

Where a person who is required to complete a tax form under the present Regulation has understated the amount of tax required to be shown on that tax form, that person shall be liable to additional tax of fifteen percent (15%) of the understatement  and:

(a)           if the understatement was due to gross carelessness on the part of the person, further additional tax of twenty-five percent (25%) of the tax understated; or

(b)           if the understatement was due to a deliberate attempt to avoid payment of tax, further additional tax of one hundred percent (100%) of the tax understated.

Section 75 Failure to create and retain records

A person who is required to create or retain records under the present Regulation and who fails to do so shall be liable to additional tax of  $100.

Part B          Offences and Penalties

Section 76 Penalties

A person who commits an offence described in this Chapter may be prosecuted in respect of that offence and if found guilty shall be liable for any penalty imposed for the offence.

Section 77 Reduction of penalties for voluntary disclosure

Where a person who could be liable to penalties in respect of offences described  in this Chapter voluntarily informs the Commissioner of their having committed such offences before their discovery by the Commissioner, the maximum financial penalty imposed in respect of an offence shall be 50% of the penalty that would otherwise  apply.

Section  78 Failure to create and retain records

A person who is required to create or retain records under the present Regulation and who fails to do so shall be liable on conviction to a penalty of:

(a)           if failure to do so was due to gross carelessness on the part of the person, twenty-five percent (25%) of the tax assessed to which the records relate; or

(b)           if failure to do so was due to a deliberate attempt to avoid payment of tax, one hundred percent (100%) of the tax assessed to which the records relate.

Section 79 Obstructing or hindering access

A person who unlawfully obstructs or hinders the Commissioner or an authorized officer from access to any place or information shall be liable on conviction  to:

(a)           a penalty of up to $1,000; and

(b)           imprisonment for a period up to three years.

Section 80 Failure to provide information or provision of false information

A person who:

(a)           fails to deliver a tax form or any other information required to be delivered under the present Regulation;

(b)           fails to provide such information in the manner required by the present Regulation; or

(c)           provides false information when information is required to be delivered under the present Regulation;

shall be liable on conviction to:

(d)           a penalty of up to $1,000; and

(e)           imprisonment for a period up to three years.

Section 81 Evasion of tax

A person who has wilfully, in any manner, evaded or defeated, or attempted to evade or defeat, tax imposed by the present Regulation, or the payment or collection of such tax, shall be liable on conviction  to:

(a)   a penalty of up to the higher of $1,000 and two hundred percent (200%) of the tax evaded; and

(b)           imprisonment for a period up to five years.

Part C          Officers and former officers of the ETRS

Section 82  Abuse of position

A person who is or has been an officer of the ETRS who  knowingly:

(a)           demands from a person an amount in excess of the authorized assessment of the tax;

(b)           withholds for his own use or otherwise any portion of the amount of tax collected;

(c)           renders a false accounting, whether verbal or in writing, of the amounts of tax collected or received by him;

(d)           defrauds a person, embezzles any money, or otherwise uses his position so as to deal wrongfully either with the Commissioner or any other   individual;

(e)                             not being authorized under the present Regulation to do so, collects or attempts to collect tax under the present Regulation; or

(f)            not being authorized under the present Regulation to do so, reveals information obtained by them from their employment with the  ETRS;

shall be liable on conviction to:

(g)           disciplinary action or dismissal;

(h)           a penalty of up to $2,000; and

(i)            imprisonment for a period up to three years.

Section  83 Assisting the avoidance of tax

A person who is or has been an officer of the ETRS who knowingly assists any other person to avoid tax under the present Regulation, whether or not the officer or former officer personally benefits as a result of the assistance, shall be liable on conviction to:

(a)           disciplinary action or dismissal;

(b)           a penalty of up to $2,000; and

(c)           imprisonment for a period up to two years.

Part D          Confidentiality of tax information

Section 84 Unauthorized release of tax information

84.1     A person, whether or not they are or have been employed by the ETRS, who participates in any capacity in a tax proceeding and who reveals any information acquired in the course of the proceeding to any other person, other than  where:

(a)           the information is needed in a tax or enforcement  proceeding;

(b)           the information is to be incorporated in official statistical reports;  or

(c)           the person or persons to whom it relates, have waived their right to the confidentiality of that information;

shall be liable on conviction to:

(d)           in the case of officers of the ETRS, disciplinary action or  dismissal;

(e)           a penalty of up to $2,000; and

(f)            imprisonment for a period up to three years.

84.2     Tax proceeding in this Section means any procedure under the present Regulation that involves the collection of information by the ETRS or the determination of a person's liability to deliver or withhold tax.

1. Board of Tax and Customs Appeals

Section 85  Establishment of the Board

85.1     There shall be established a Board of Tax and Customs Appeals to hear all proceedings arising under the present Regulation.

85.2     Members of the Board shall be appointed by the Transitional Administrator, after consultation with the National Council, and on advice of the Head of the Central Fiscal Authority, for a term of 2 years.

85.3     The Head of the Central Fiscal Authority shall provide the Board with an operating budget.

85.4     The Board is authorized to hire competent staff, acquire equipment necessary to carry out its functions, and establish premises from which it will  operate.

85.5     The Board shall consist of a Chief Member and no more than 2 deputy members, all of whom are independent of the ETRS and the Border Service for East  Timor.

85.6     The Head of the Central Fiscal Authority shall establish appropriate compensation levels for members of the Board.

85.7     The Transitional Administrator may remove one or more members of the Board if he determines that the member is unfit to execute his functions or has sat on an appeal panel in a position of conflict of interest contrary to Section  87.6.

Section 86  Role of the Board

86.1     The Board shall have jurisdiction to receive appeals against a decision  of:

(a)           the Appeals Office established under Section 69.1;

(b)           the Commissioner in respect of any tax administered by the ETRS where that decision has been appealed to the Appeals Office and the Appeals Office has not delivered a decision within 42 days under Section  69.7;

(c)           the Border Service Controller under Section 19.1 of Regulation No. 2000/9 in respect of a decision on a matter delegated to the Controller under Section 6.1(c); and

(d)           an officer of the Border Service where an adverse decision by that officer  in relation to a matter delegated to the Controller under Section 6.1(c) has not been reviewed by the Border Service Controller and the applicant notified within 7 days of their application for review under Section 19.1 of Regulation No. 2000/9.

86.2     The person appealing to the Board shall have the burden of proving that a decision against which he is appealing is  incorrect.

86.3     In reviewing decisions under Section 86.1, the Board shall review the relevant testimony, documents and other evidence presented by the person appealing to the Board and by the ETRS or Border Service and make its own findings of fact and conclusions of law.

86.4       The decision by the Board shall be binding on both the person appealing to  the

Board and the Commissioner or Border Service Controller , as the case may  be.

Section 87  Procedures of the Board

87.1     The Board shall prescribe rules of procedure appropriate for its  operations.

87.2       The Head of the Central Fiscal Authority may establish a user fee for  persons

bringing appeals before the Board.

87.3     The Chief Member shall nominate an appeal panel of up to three members to hear an appeal brought before it.

87.4     The times and places of the hearings of the Board shall be specified by the Chief Member with a view to securing a reasonable opportunity for persons to appear before the Board with as little inconvenience and expense as is  practicable.

87.5     An appeal panel shall hear evidence under Section 86.3, discuss the case as a panel, and issue a written opinion, including the findings of fact or opinion of the Board, within 15 days of the conclusion of the hearing.

87.6     No member shall sit on an appeal panel where there is any likelihood of a conflict of interest by virtue of family relationships, business relationships or any other  factors.

Section 88 Confidentiality

The Board and its members shall maintain the confidentiality of all information and data obtained while performing its official  functions.

Section 89 Appeals

Decisions of the Board may be appealed to a court of competent  jurisdiction.

Section 90  Dictionary and interpretation

References to the Commissioner and the Border Service Controller in this Chapter shall include persons to whom the Commissioner and the Border Service Controller have delegated authority under a delegation power contained in a  Regulation.

1. Anti-avoidance

Section 91 Transactions between associates

The Commissioner may adjust any amount in respect of a transaction between associates to the amount that could be expected to be used had the persons not been associates.

Section 92 Diverted receipts

A person shall be treated as having received any amount that  is:

(a)           reinvested or accumulated for the person’s benefit;  or

(b)           dealt with on the person’s behalf or as the person  directs.

Section 93 Commissioner may recharacterize arrangements

For the purposes of determining liability to tax under the present Regulation,  the

Commissioner may:

(a)           recharacterize an element of a transaction that was entered into as part of scheme to avoid a liability to taxation;

(b)           disregard a transaction that does not have substantial economic effect;  or

(c)           recharacterize a transaction where the form of the transaction does not reflect its economic substance.

1. Entry into Force

Section 94 Entry into force

The present Regulation shall enter into force on 1 July  2000.

Sergio Vieira de Mello Transitional Administrator

SCHEDULE 1

Rates of Tax and Import Duty, Exemptions and Dates of Effect

The rates of tax and import duty, exemptions and dates of effect set out in this Schedule may be amended in an annual Appropriations Regulation or a Supplement to an Annual Appropriations Regulation as appropriate to suit economic conditions and to meet revenue needs.

Section 1 Services Tax

Part A:  Tax Rates

(a)         The rates of services tax for the purposes of Section 11 for the period from 1 July 2000 to 31 December 2000 for persons who provide no designated services other than restaurant and bar services are as  follows:

(i)            persons with a monthly turnover of  designated

services less than $1,000: 0%

(ii)           persons with a monthly turnover of

designated services of $1,000 or more: 10%

(b)           The rates of services tax for the purposes of Section 11 for all other  persons

providing designated services are as follows:

(i)            persons with a monthly turnover of  designated

services less than $500: 0%

(ii)           persons with a monthly turnover of

designated services of $500 or more: 10%

(c)         For the avoidance of doubt, the applicable rate of services tax applies to the entire gross consideration received by a person providing designated  services.

Part B: Exemptions None

Part C: Date of Effect

(a)           Services tax shall be imposed on the gross consideration received by a person  for

designated services provided by him on or after 1 July  2000.

(b)           A person who provides designated services after 1 July 2000 shall be treated as receiving on 1 July 2000 any consideration received prior to that date for services to be provided on or after that day.

Section 2 Excise Tax

Part A: Tax Rates

The rates of excise tax for the purposes of Section 17 are set out in the following  Table:

Part B:  Exemptions

Goods that are exempt from import duty under Part B of Section 4 of Schedule 1 are exempt from excise tax on importation.

Goods referred to in Section 20.2

Part C:  Date of Effect

Excise tax is imposed on goods imported into East Timor and on goods produced in East Timor on or after 20 March 2000.

Section 3 Sales Tax

Part A:  Tax Rates

The rates of sales tax for the purposes of Section 22 are as  follows:

(a)   in respect of goods imported into East Timor    5%

(b)   in respect of sales of goods or the provision of

services in East Timor    [to be decided later]%

Part B:  Exemptions

(a)   in respect of goods imported into East Timor:

(i)            Goods that are exempt from import duty under Part B of Section 4 of Schedule 1 are exempt from sales tax on  importation.

(ii)           Goods referred to in Section 25.2

(b)   in respect of sales of goods or the provision of services in East  Timor:

(i)            [to be decided later]

(ii)           Persons whose monthly turnover from sales and provision of services does not exceed $[to be decided later]

(iii)       Goods and services referred to in Sections 25.3 and 25.4 Part C:  Date of Effect

Sales tax is imposed on goods imported into East Timor on or after 20 March  2000.

Sales tax on sales of goods and the provision of services in East Timor has not come into effect. It applies to sales of goods and the provision of services on or after [to be decided later].

Section 4 Import Duty

Part A:  Tax Rate

The rate of import duty for the purposes of Section 27 is 5% of the customs value of  the

goods.

Part B:  Exemptions

The following imported goods shall be exempt from import  duty:

(a)           humanitarian relief goods financed by international grants for the immediate relief of human pain and suffering, including food, medicine, clothing and shelter, that are sent without any consideration being received by the sender;

(b)           where the goods accompany a person arriving in East Timor from another territory:

(i)            two hundred (200) cigarettes and two and one half (2.5) litres of excisable beverages per person;

(ii)           goods up to a value of US $300 of a non-commercial nature that  are exclusively for the personal use or enjoyment of travellers or goods intended as gifts, where the nature and quantity of the goods indicate that they are not imported for, or intended to be imported, for commercial purposes;

(iii)         goods of a non-commercial nature, other than jewellery, brought into East Timor by travellers in accompanying luggage or carried on or about the travellers’ bodies; and

(iv)         household effects accompanying former residents of East  Timor

returning to reside in East Timor on a permanent  basis;

(c)           imports of the type exempted under the Vienna Conventions on  Diplomatic Relations of 1961 and Consular Relations of 1963 and imports exempted under the Convention on the Privileges and Immunities of the United Nations;

(d)           goods re-imported in the same condition in which they were  exported;

(e)           goods imported by the United Nations, including the specialized agencies of the United Nations, other international organizations, not-for-profit organizations, or foreign governments, including agencies of foreign governments, to be used or distributed for the public benefit through any of the following objectives:

(i)                              humanitarian assistance and relief;

(ii)           charity;

(iii)         education;

(iv)         health;

(v)           social welfare;

(vi)         economic reconstruction and development;

(vii)        assistance and protection of East Timorese displaced or otherwise affected by conflict;

(viii)      environmental protection;

(ix)         the protection and promotion of human rights;

(x)           the preservation of traditional culture;

(xi)         the promotion of indigenous processes of  reconciliation;

(xii)        the maintenance or promotion of peace and  security;

(xiii)      the promotion of good governance; or

(xiv)      any other objective that is determined by UNTAET to be one that serves the public benefit;

but excluding goods imported for sale or private benefit, tobacco and alcohol products and the personal effects of  employees;

(f)            goods necessary to deliver any of the objectives described in paragraph (e) including necessary equipment and  infrastructure;

(g)           goods for temporary admission;

(h)           baby formulas that are specially designed for babies under one (1) year of age so that after preparation they are consumed in a liquid form and provide the health benefits of human milk that would normally be provided to a baby that suckles from its mother;  and

(i)            tampons and sanitary napkins.

Part C:  Date of Effect

Import duty is imposed on goods imported into East Timor on or after 20 March  2000.

Section 5 Wages Tax

Part A:  Tax Rates

The rates of wage income tax imposed on wages for the purposes of Section 28 for each day or part day of employment are as follows:

(a)           if the employee has provided the employer with the employee’s tax identification number:

WAGES RATE

$0 - $[to be decided later]          0%

[$[to be decided later]-$[to be decided later]          [to be decided later]

$[to be decided later]-$[to be decided later]          [to be decided later]

“          “          “          “          “          “          “

(continued for as many rates as are desired)

“          “          “          “          “          “          “]

wages in excess of $[to be decided later]          [to be decided later]

%;

(b)         in all other cases          [to be decided later, the same as the highest  rate in (a)] %.

Part B:  Exemptions

(a)  [To be decided later]

(b)  [To be decided later]

Part C:  Date of Effect

Wages tax has not come into effect. It applies to wages received on or after [to be decided later].

Section 6 Income Tax

Part A:  Tax Rates

For the purposes of the application of the Law on Income Tax, the rates of income tax imposed on taxable income in a tax year are as  follows:

(a)  for residents, and non-residents who have a permanent establishment in East Timor:

TAXABLE INCOME          RATE

$0 – [$US equiv of 25 mill Rupiah] 10% [$US equiv of 25 mill to 50  mill Rupiah] 15% taxable income in excess of [$US equiv of 50 mill]   30%

(b)                 for all other non-residents:          20% The rate of tax imposed on coffee exports under Section 36.1 is 5%.   Part B:  Exemptions

Those exemptions specified in Article 4(3) of the Law on Income Tax including the paragraphs added by Section 39 which provides for all income in the period from 25 October to 31 December 1999 to be exempt and for a taxable income exemption of up  to

$20,000 for the 2000 tax year.