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Tonga’s investment incentive scheme is being repealed to enable compliance with WTO accession requirements. At the same time, Government as part of its tax reform program is committed to bringing down the Customs Duty in the Industrial Sector to a fix rate of zero in terms of its input costs. While awaiting this new form of tax (ie. enforce in the new Customs Excise Regulation that is yet to be implemented), the Ministry still continue with the Incentive scheme (on a case by case basis) until the new Customs Excise Regulation becomes effective.
REVISED INCENTIVES GRANTED UNDER THE INDUSTRIAL DEVELOPMENT INCENTIVES ACT, 1978 (IDI ACT)
1. Manufacturing, Assembling, Processing Industries:
- - Two (2) years exemption from Custom Duty on imported Capital Equipment
- Five (5) years Tax holiday is only allowed for export oriented project where more than 90% of annual sales are exported.
* Duty free vehicle as part of the capital equipment is subject to 100% Port & Services Tax.
2. Tourism Projects – Accommodation for tourists on daily basis (Motel, Hotel) and Cruising vessels & Tourist Attractions.
- - Two (2) years exemption from Customs Duty on imported Capital Equipment
- Repatriation of Funds in the case of Foreign Investment
* Minibus/Van as part of the capital equipment is fully exempted from customs duty but subject to full payment of Port & Services Tax.
3. Commercial Farming for Exports
- - Two (2) years Duty Free importation of Capital Equipment
* Vehicle (van/truck) is fully exempted from Customs Duty but subject to full payment of Port & Services Tax.
4. Commercial Fishing for Exports
- - Two (2) years Duty Free importation of Capital Equipment
* Vehicle (van/truck) is fully exempted from Custom Duty but subject to full payment of Port & Services Tax.
Please Note:
Investment Criteria for Tax Holiday:
: Five (5) years Tax Holiday
: Ten (10) years Tax Holiday
: Fifteen (15) years Tax Holiday
