Taxes in Nauru

Nauru has one national tax system, with no evidenced regional or municipal tax differences. The NRO and the Secretary for Finance handle tax administration, while the Nauru Customs Service administers import duties and tariffs. The tax year covers the 12 months ending on 30 June. The dollar notation used on official forms is the statutory dollar amount. A person, employer or payer that becomes liable for tax generally applies for a Taxpayer Identification Number (TIN) within seven days and uses it on returns, notices and other tax documents. Records must be kept in English for at least five years, and electronic records are permitted. Nauru uses self-assessment, so the taxpayer or withholding payer calculates the amount, files the required return and pays by the applicable deadline. Employment Tax applies to employment income sourced in Nauru. Taxable amounts can include salary, wages, allowances, leave pay, overtime, bonuses, commissions, gratuities and termination payments. A resident individual has a zero rate up to $9,240 per month, $4,257 per fortnight or $2,129 per week, with income above the relevant threshold generally taxed at 20%. A resident individual includes defined categories such as a Nauruan citizen without a permanent home outside Nauru, a resettled refugee or asylum seeker, a spouse of a resident individual and a citizen posted by the Government of Nauru. A resident public corporation employee is taxed at 30%. For a non-resident expatriate working for the Government of Nauru or a state-owned enterprise, the annual rate is 0% up to $20,000 and 20% above that amount; other non-residents generally face 20%. Certain employment-related allowances may be excluded, and the NRO's published guidance states that non-cash fringe benefits are not taxed. Services Tax is collected through withholding on payments to independent professionals, construction providers and suppliers of know-how or management services. The resident-individual thresholds and 20% rate generally correspond to Employment Tax. A non-resident provider connected with a resident public corporation is subject to 30%, while a non-resident provider for the Government of Nauru or a state-owned enterprise has a 0% rate up to $20,000 annually and 20% above that amount. Other non-residents generally face 20%. A payer needs a TIN and withholds the tax. An employee or service provider whose tax is finally withheld generally does not file a separate return for that income. Services Tax does not apply where the payment is effectively connected with a permanent establishment in Nauru. The Business Tax Act 2016 governs Business Profits Tax (BPT). BPT is based on taxable income after permitted expenses, inventory adjustments, depreciation, business assets and losses. A resident individual pays 0% on taxable income up to $250,000 and 20% above that amount. A resident partnership or trust generally pays 20% after a $250,000 deduction for each Nauruan resident partner or beneficiary. Resident companies with annual gross revenue up to $15 million fall into Category A at 20%; resident companies above $15 million fall into Category B at 25%. A resident company controlled by non-residents is generally taxed at 25%, or 30% when it carries on a resident public corporation business. A non-resident company operating through a permanent establishment generally pays 25%, or 30% for a resident public corporation business. Other persons generally pay 20%. Small Business Tax (SBT) is available to a non-resident individual whose business is carried on solely in Nauru and whose gross revenue does not exceed $250,000. It is a final tax on gross revenue at 3.5% from 1 July 2024. The taxpayer may seek approval to use BPT instead when proper records are maintained. Revenue above $250,000 moves the business to BPT from the following year. Non-Resident Tax (NRT) applies to Nauru-source interest, royalties and insurance premiums. The general rate is 20%, with a 30% rate for specified resident public corporation-related cases. The payer, a Nauru resident or a Nauru permanent establishment with the relevant payment obligation withholds the tax. NRT is charged on the gross amount, without deductions. BPT instalment returns and payments are due on 15 October, 15 January, 15 April and 15 July. For an established business, the quarterly instalment is generally based on one quarter of the previous year's BPT; a new business generally pays 0.5% of gross revenue for each period. Annual BPT returns are due at least three months after 30 June, normally by 30 September. Companies, individuals, partnerships and trusts use different return categories, and a net loss can still require a return unless the Secretary for Finance provides an exception or request. SBT quarterly returns and payments are due within 15 days after 30 September, 31 December, 31 March and 30 June. NRT and Employment Tax returns and payments are due within 15 days after each month ends. Annual withholding summaries are due within 15 days after 30 June, normally by 15 July. The NRO can request information and documents, conduct risk-based audits, issue default, advance or amended assessments, and charge late interest and penalties for late filing, late payment, shortfalls or avoidance. Recovery measures can include court proceedings, seizure or forfeiture, garnishee action, business closure and a restriction on departure. The reviewed NRO material does not evidence a separate filing fee. A taxpayer that overpaid can apply for a refund on the approved form within two years after payment. The NRO first applies the overpayment to outstanding tax, may apply it as a future credit with consent and refunds any remaining amount within 45 days after the decision notice. A written objection to an assessment must normally be filed within 30 days after service, state the grounds and specify the requested change. The undisputed amount and 30% of the disputed assessment must be paid before the objection is considered. If the Secretary has not decided within 60 days, the objection is treated as disallowed. A review by the Minister for Finance and an appeal to the Supreme Court are each generally subject to a 30-day period; a Supreme Court appeal is limited to a point of law and does not automatically suspend the assessment. Since the foreign-income rules took effect on 1 July 2021, resident persons generally include worldwide business income, while non-residents generally include only Nauru-source income. A foreign tax credit is limited to the Nauru BPT attributable to the net foreign income, requires proof of foreign tax paid and must generally be claimed within two years; excess credit cannot be carried forward or refunded. Foreign losses can be used only against foreign income and may be carried forward for up to three years. Transfer pricing follows the arm's-length principle, with OECD Transfer Pricing Guidelines used for interpretation, contemporaneous documentation and production within 30 days of a request. Nauru also has tax-information exchange and automatic financial-account information rules, but treaty allocation requires case-specific review because no general bilateral treaty outcome should be assumed. International transport tax currently has a statutory rate of 0% for outbound carriage of passengers, livestock, mail, merchandise or goods, although clearance and payment mechanics can still apply to ships and aircraft. Import taxation is administered through the Customs Act 2014 and Customs Tariff Act 2014, including classification, valuation, tariffs and concessions. Telecommunications Service Tax is reported at 10% of gross telecommunications sales. The reviewed sources do not evidence a current VAT or GST; IMF material describes VAT as a possible long-term reform option, not as a tax currently in force.