Government Ministries and Departments are not required to submit income tax returns. They are however required to submit the monthly PAYE returns and the PAYE Reconciliations and pay tax due (if any). Ministries and Departments are also obliged to provide each of their employees with the tax withholding certificates (Form 4).
Licencing Authorities must also be registered for Consumption Tax (CT) and must charge CT in their fees. Consequently, they must submit month CT returns to the Ministry and pay tax due
Non Government Organisations
Charitable organisations are organisations (incorporated or not) that carry out charitable activities or exist exclusively for charitable purposes. They are exempt from income tax except on business income they derive. For an organisaion's purposes to be charitable, its activities or aims must be for public purposes - the benefit must be available to a large part of the community. In addition, it must not be carried on for the benefit or profit of any individual.
Registration of charities
All Charitable organisations must register with the Ministry of Commerce, Labour and Industries as a charitable entity. Registration is voluntary, but if an entity wishes to retain or obtain an exemption from income tax then it will need to register.
Income tax, tax rates and exemptions
Charitable organisations are liable for income tax if they operate with no written rules, constitution or trust deed or they operate under a set of rules, a constitution or a trust deed that does not meet the requirements for income tax exemption or they run a business whether in or out of Tonga.
Filing income tax returns
If your charitable organisation is assessed as being fully exempt from income tax, you don't need to file an income tax return unless we request one. However, you still need to keep accurate records for the organisation.
Do you need to register for CT?
If you provide goods or services you may need to register for CT. In general if you are conducting a taxable activity eg. a business and your annual turnover has exceeded $100,000 you must register.
Charity - Income Tax
Charitable organisations can receive many types of income, including subscriptions, grants, subsidies, donations, fees, raffle money, trading profits, proceeds from selling assets and so on.
Charitable organisations are liable for income tax if:
they operate with no written rules, constitution or trust deed
they operate under a set of rules, a constitution or a trust deed that does not meet the requirements for an income tax exemption
they have business income.
PAYE of employees
If your non profit organization have employees, you are obliged under the law to withhold tax and remit to the Ministrys office. Please click here for more details on employee PAYE.