Act No. 02(2008)
AN ACT
TO AMEND THE INCOME TAX ACT 2007
BE IT ENACTED by the King and the Legislative Assembly of Tonga in
the Legislature of the Kingdom as follows:
1. This Act may be cited as the Income Tax (Amendment) Act 2008.
2. The Income Tax Act 2007 is in this Act referred to as the Principal Act.
3. Section 2 of the Principal Act shall be amended as follows –
(a) insert after the definition of “business income”, the definition
of “business loss” as follows –
“business loss” has the meaning in section 37(3)”;
(b) delete the term “presumptive income taxpayer” and its
definition; and
(c) in the English version only, in the definition of “resident
person”, insert the word “the” before the word “meaning”,
4. Section 5 of the Principal Act shall be amended as follows –
(a) in subsection (1) delete the word “and” and substituting with
“or an Order”;
(b) in subsection (3)(b), delete –
(i) “90” and substitute “89”; and
(ii) “92” and substitute “91”;
(c) in subsection 4(a) delete “section 6, 7 or 8” and substitute
“sections 6 or 7”; and
I assent,
GEORGE TUPOU V,
10th July, 2008.
19th June, 2001.
Tonga. No. 2 of 2008
20. Section 71(9)(b) of the Principal Act is amended by deleting “or minimum
income tax”.
21. Section 73(1)(a) of the Principal Act is amended by deleting “showing
the gross amount of income tax specified in section 7(2) in respect of
the ship” and substitute” in the form and manner prescribed”.
22. Section 74(3) of the Principal Act is amended by deleting “gross amount
specified in section 7(2)” and substitute “amount on which tax is payable
under section 7”.
23. Section 79 of the of the Principal Act is amended by –
(a) in subsection (2), deleting “of – (a) in the case of an insurance
premium, 5% (b) in the case of rent, 7.5%; or (c) in any other
case, 15%” and substitute “specified in the Order referred to
in section 6 of this Act”; and
(b) adding new subsection (4) immediately after subsection (3) as
follows –
“(4) A non-resident may appoint a representative to withhold and
pay the withholding tax due under this section on behalf of
the payer.”
24. Section 90(2) of the Principal Act is amended by deleting paragraph (a)
and substitute with the following new paragraph (a) –
“(a) the income shall not be included in gross income in computing the
chargeable income of the person who derives it for any fiscal year;”
25. The First Schedule of the Principal Act is amended by –
(a) in clause 1 –
(i) in the definition of “benchmark rate”, delete “rediscount
rate” and substitute “weighted average lending rate”;
(ii) add the following definition of “cost” immediately after
“benchmark rate” as follows –
“cost” means –
(a) the actual cost to the employer in acquiring the motor
vehicle in the first year;
(b) the depreciated cost in the 2nd to 4th years of
ownership of the motor vehicle; and
(c) the fair market value of the vehicle in subsequent years.
(b) in clause 9, delete “Act” and substitute “Schedule”.
Passed in the Legislative Assembly this 30th day of June, 2008.
4 The Income Tax (Amendment) Act – 2 of 2008
[30 June, 2008]
(d) in subsection 4(b) delete “91” and substitute “90”.
5. Section 6 of the Principal Act shall be amended as follows –
(a) in subsection (1) delete the word “and” and substituting with
“or an Order”;
(b) in subsection (1)(d) delete the word “or” and add new
paragraphs (f) and (g) as follows –
“(f) rent; or
(g) natural resource amount.”;
(c) in subsection (2)(b), after the word “royalty” wherever it
appears, add “, rent or natural resource amount”;
(d) in subsection (3) –
(i) after “royalty” add the words “, rent, natural resource
amount,”; and
(ii) delete “(3)” and substitute “(2)”; and
(e) in subsection (4) delete “80” and substitute “79”.
6. Section 7(1) of the Principal Act shall be amended by deleting the word
“and” and substituting with “or an Order”
7. Section 9 of the Principal Act shall be amended as follows –
(a) in the heading, delete “6, 7, and 8” and substitute “6 and 7”;
(b) delete paragraph “(a)” and substitute with the following
“(a) the income shall not be included in gross income in
computing the chargeable income of the person for any
fiscal year;”;
(c) delete paragraph “(c)” and substitute with the following –
“(c) the amount on which tax is imposed shall not be reduced
by any loss;”; and
(d) in paragraph (d) delete “6, 7, or 8” and substitute “section 6
and 7”.
8. Section 16 of the Principal Act is amended by inserting a new
subsection (6) as follows –
“(6) The income derived by the European Investment Bank to
the extent provided by Gazette No. 9 of 2006”.
9. Section 19(2) of the Principal Act is amended by replacing the words
“scheme approved by His Majesty in Council” with the words “received
from an approved retirement fund”.
10. Section 22 of the Principal Act is amended as follows –
(a) in the heading by adding the word “approved” before the word
“retirement”;
(b) in subsection (2) –
(i) by inserting “an approved” before “retirement”; and
(ii) in the English version only, delete “a”.
11. Section 26(2) of the Principal Act is amended by deleting that subsection
and substituted with the following new subsection (2) –
“(2) A person required to withhold tax from an amount paid by the
person shall not be allowed a deduction for the amount until
the withheld tax has been paid to the Chief Commissioner.”
12. Section 43 of the Principal Act is amended as follows –
(a) in the definition of “financial lease’, in paragrph (b), delete
“accounting” and substitute “financial reporting”;
(b) in subsection (4)(b), after “associates”, insert “or if no amount
is stated as the cost or value of the asset in the lease agreement”,
13. Section 44(8) of the Principal Act in the English version only, is amended
by deleting “used” and substituting as “applied”.
14. Section 45(7) of the Principal Act is amended by deleting “or the loan”.
15. Section 49(4)(b) of the Principal Act is amended by deleting “or
intangible”.
16. Section 56(7) of the Principal Act is amended by deleting that subsection
and substituting the following new subsection (7) –
“(7) The gross income of a resident beneficiary includes a
distribution received by the beneficiary to the extent to which
the distribution is foreign-source income derived by the trustee
of the trust that was not taxed to the beneficiary under
subsection (3) or the trustee under subsection (6) in the fiscal
year in which it was derived by the trustee.”
17. Section 58(1) of the Principal Act is amended, in the definition of “carry
forward losses”, by deleting “an interest deduction carried forward under
section 34,”.
18. Section 68(1) of the Principal Act is amended by deleting –
(a) “, other than a presumptive income taxpayer,”; and
(b) “two” and substitute with “four”.
19. Section 70 of the Principal Act is amended in subsection (4)(b), delete
“and minimum income tax”.
2 The Income Tax (Amendment) Act – 2 of 2008 The Income Tax (Amendment) Act – 2 of 2008 3
(d) in subsection 4(b) delete “91” and substitute “90”.
5. Section 6 of the Principal Act shall be amended as follows –
(a) in subsection (1) delete the word “and” and substituting with
“or an Order”;
(b) in subsection (1)(d) delete the word “or” and add new
paragraphs (f) and (g) as follows –
“(f) rent; or
(g) natural resource amount.”;
(c) in subsection (2)(b), after the word “royalty” wherever it
appears, add “, rent or natural resource amount”;
(d) in subsection (3) –
(i) after “royalty” add the words “, rent, natural resource
amount,”; and
(ii) delete “(3)” and substitute “(2)”; and
(e) in subsection (4) delete “80” and substitute “79”.
6. Section 7(1) of the Principal Act shall be amended by deleting the word
“and” and substituting with “or an Order”
7. Section 9 of the Principal Act shall be amended as follows –
(a) in the heading, delete “6, 7, and 8” and substitute “6 and 7”;
(b) delete paragraph “(a)” and substitute with the following
“(a) the income shall not be included in gross income in
computing the chargeable income of the person for any
fiscal year;”;
(c) delete paragraph “(c)” and substitute with the following –
“(c) the amount on which tax is imposed shall not be reduced
by any loss;”; and
(d) in paragraph (d) delete “6, 7, or 8” and substitute “section 6
and 7”.
8. Section 16 of the Principal Act is amended by inserting a new
subsection (6) as follows –
“(6) The income derived by the European Investment Bank to
the extent provided by Gazette No. 9 of 2006”.
9. Section 19(2) of the Principal Act is amended by replacing the words
“scheme approved by His Majesty in Council” with the words “received
from an approved retirement fund”.
10. Section 22 of the Principal Act is amended as follows –
(a) in the heading by adding the word “approved” before the word
“retirement”;
(b) in subsection (2) –
(i) by inserting “an approved” before “retirement”; and
(ii) in the English version only, delete “a”.
11. Section 26(2) of the Principal Act is amended by deleting that subsection
and substituted with the following new subsection (2) –
“(2) A person required to withhold tax from an amount paid by the
person shall not be allowed a deduction for the amount until
the withheld tax has been paid to the Chief Commissioner.”
12. Section 43 of the Principal Act is amended as follows –
(a) in the definition of “financial lease’, in paragrph (b), delete
“accounting” and substitute “financial reporting”;
(b) in subsection (4)(b), after “associates”, insert “or if no amount
is stated as the cost or value of the asset in the lease agreement”,
13. Section 44(8) of the Principal Act in the English version only, is amended
by deleting “used” and substituting as “applied”.
14. Section 45(7) of the Principal Act is amended by deleting “or the loan”.
15. Section 49(4)(b) of the Principal Act is amended by deleting “or
intangible”.
16. Section 56(7) of the Principal Act is amended by deleting that subsection
and substituting the following new subsection (7) –
“(7) The gross income of a resident beneficiary includes a
distribution received by the beneficiary to the extent to which
the distribution is foreign-source income derived by the trustee
of the trust that was not taxed to the beneficiary under
subsection (3) or the trustee under subsection (6) in the fiscal
year in which it was derived by the trustee.”
17. Section 58(1) of the Principal Act is amended, in the definition of “carry
forward losses”, by deleting “an interest deduction carried forward under
section 34,”.
18. Section 68(1) of the Principal Act is amended by deleting –
(a) “, other than a presumptive income taxpayer,”; and
(b) “two” and substitute with “four”.
19. Section 70 of the Principal Act is amended in subsection (4)(b), delete
“and minimum income tax”.
2 The Income Tax (Amendment) Act – 2 of 2008 The Income Tax (Amendment) Act – 2 of 2008 3
AN ACT
TO AMEND THE INCOME TAX ACT 2007
BE IT ENACTED by the King and the Legislative Assembly of Tonga in
the Legislature of the Kingdom as follows:
1. This Act may be cited as the Income Tax (Amendment) Act 2008.
2. The Income Tax Act 2007 is in this Act referred to as the Principal Act.
3. Section 2 of the Principal Act shall be amended as follows –
(a) insert after the definition of “business income”, the definition
of “business loss” as follows –
“business loss” has the meaning in section 37(3)”;
(b) delete the term “presumptive income taxpayer” and its
definition; and
(c) in the English version only, in the definition of “resident
person”, insert the word “the” before the word “meaning”,
4. Section 5 of the Principal Act shall be amended as follows –
(a) in subsection (1) delete the word “and” and substituting with
“or an Order”;
(b) in subsection (3)(b), delete –
(i) “90” and substitute “89”; and
(ii) “92” and substitute “91”;
(c) in subsection 4(a) delete “section 6, 7 or 8” and substitute
“sections 6 or 7”; and
I assent,
GEORGE TUPOU V,
10th July, 2008.
19th June, 2001.
Tonga. No. 2 of 2008
20. Section 71(9)(b) of the Principal Act is amended by deleting “or minimum
income tax”.
21. Section 73(1)(a) of the Principal Act is amended by deleting “showing
the gross amount of income tax specified in section 7(2) in respect of
the ship” and substitute” in the form and manner prescribed”.
22. Section 74(3) of the Principal Act is amended by deleting “gross amount
specified in section 7(2)” and substitute “amount on which tax is payable
under section 7”.
23. Section 79 of the of the Principal Act is amended by –
(a) in subsection (2), deleting “of – (a) in the case of an insurance
premium, 5% (b) in the case of rent, 7.5%; or (c) in any other
case, 15%” and substitute “specified in the Order referred to
in section 6 of this Act”; and
(b) adding new subsection (4) immediately after subsection (3) as
follows –
“(4) A non-resident may appoint a representative to withhold and
pay the withholding tax due under this section on behalf of
the payer.”
24. Section 90(2) of the Principal Act is amended by deleting paragraph (a)
and substitute with the following new paragraph (a) –
“(a) the income shall not be included in gross income in computing the
chargeable income of the person who derives it for any fiscal year;”
25. The First Schedule of the Principal Act is amended by –
(a) in clause 1 –
(i) in the definition of “benchmark rate”, delete “rediscount
rate” and substitute “weighted average lending rate”;
(ii) add the following definition of “cost” immediately after
“benchmark rate” as follows –
“cost” means –
(a) the actual cost to the employer in acquiring the motor
vehicle in the first year;
(b) the depreciated cost in the 2nd to 4th years of
ownership of the motor vehicle; and
(c) the fair market value of the vehicle in subsequent years.
(b) in clause 9, delete “Act” and substitute “Schedule”.
Passed in the Legislative Assembly this 30th day of June, 2008.
4 The Income Tax (Amendment) Act – 2 of 2008
[30 June, 2008]
