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The Government of Tonga regulates investment mainly through legislation, although in some instances where specific legislation does not exist policy is applied on a case by case basis.
The three principle instruments of legislation are:
- • The Companies Act 1995 and subsequent amendments
• The Business Licenses Act 2002 and Business Licenses Regulations 2007
• The Foreign Investment Act 2002 and Foreign Investment Regulations 2006
COMPANY REGISTRATION
Under the Companies Act of 1995 the government requires all companies doing business in Tonga to be registered with the Registrar of Companies. They can either be incorporated in Tonga under Part II of the Act or register as an overseas company under Part XVIII of the Act.
Registering as a Tongan company
A complete application must include the following:
- 1. Form 1 – Application for Incorporation
2. Form 2 – Adequate Liquidity
3. Form 3 – Consents of Directors/Company Secretary
4. Form 4 – Consent of Shareholders
5. Company Constitution – certified by the applicant
6. Copy of notice of name reservation
7. Application fee
Registering as an overseas company
A complete application must include the followings:
- - overseas company
- full names and residential addresses of company directors & company secretary at the time of application
- the full physical address of the place of business in Tonga
- the full name and residential address of person in Tonga being authorized to accept documents/communications on behalf of the overseas company
- 1. Company Name must be reserved under prescribed FORM 5. Name reservation fee is T$69.00.
2. Application to be made on Form 22, stating the names of:3. Evidence of incorporation in the country of registration
4. Copy of instrument constituting or defining the constitution of the company
5. Copy of notice of reservation of name
6. Application fee of T$690.00 (15% CT included)
BUSINESS LICENSING
The Business License Act 2002 requires that all persons carrying out any business activity for the purposes of generating revenue in trade, commerce or industry in Tonga, except for the hawking or selling of fish, agricultural produce or native articles hold a valid Business License.
Schedule 2 of the Business License Regulations 2007 lists 126 Business Activities, with a separate License being required for each activity.
To apply for a Business License it is necessary to first obtain a sector-specific permit from the relevant ministry if operating in the following sectors:
| Sector | Permit / Ministry |
| Liquor outlets | Liquor License |
| Restaurants and food related businesses | Health Certificate |
| Technical trades and professions | Qualification documents or practicing certificates specific to each trade or profession; Law Practitioners Practising Certificate; Health Practitioners Certificate |
| Electrical services | Letter of approval from TEPB |
| Taxi services | Vehicle registration |
| Flammable goods outlets | Letter of approval from the Fire Department |
| Businesses involving the export of native plants | Letter of approval from the Ministry of Agriculture, Fisheries and Food |
Applications for a License need to be accompanied by copies of (i) passport or birth certificate if a sole proprietor or a partnership, (ii) the Partnership Agreement if a partnership, (iii) the Company Registration Certificate if a company, (iv) the Foreign Investment Registration Certificate if a foreign investor.
Additional statistical information on the anticipated turnover and number of employees by categories is required of all applicants.
If the application is for “Importing”, details of the expected goods to be imported and the countries of origin is also to be provided.
All licenses are valid for one year, and are renewable on application. The cost of the initial Business License is T$100. Renewals cost T$65.
Foreign Investment Approval.
The Government of Tonga welcomes foreign investment, and governs it through two key pieces of legislation:
• The Foreign Investment Act 2002
• The Business Licenses Act 2002
Under the Foreign Investment Act every foreign investment business is required to obtain and hold a valid foreign investment registration certificate issued by the Secretary for Labour, Commerce and Industries. A foreign investor must already hold a foreign investment registration certificate before applying for a business license.
Foreign investor definition
A foreign investor is defined as:
Reserved, Restricted, and Prohibited activities
Certain activities are (i) reserved for Tongan citizens, (ii) have restrictions placed upon foreigners, or (iii) are prohibited to Tongans and foreigners alike.
The Reserved and Restricted Lists are contained in Schedules 1 and 2 of the Foreign Investment Regulations 2006 respectively (see lists on application form section for Foreign Investment Certificate). Prohibited activities are defined in Schedule 1 of the Business Licenses Act 2002.
Foreign investment administration
The Government requires that all foreign investments be registered with the Ministry of Labour, Commerce, and Industry. Application forms are available from the “Downloads section” above, and are processed within 7 working days for a one-off fee of TOP100. In determining an application for a foreign investment registration certificate, MLCI assesses whether or not the proposal is for a reserved, restricted, or prohibited activity. A certificate will not be issued for activities that are reserved or prohibited, or which do not comply with the conditions applicable to a restricted activity.
Certificates are valid from the date of issue until the termination of the business activity in question. Information is held on a foreign investment register by MLCI, and is open for inspection. Certificate holders may apply to transfer the certificate to another foreign business. It should be noted that all business activities in Tonga require a separate Business License. Once a foreign investor has been granted a certificate, they should submit a copy of it as part of the documentation supporting their application for a business license.
