Independent Pacific island kingdom and Commonwealth realm.
25% (per Bloomberg Tax, cited via Tax Foundation's sourced compilation).
Resolved: Tonga does impose income tax on individuals via progressive PAYE withholding, confirmed via a payroll-compliance source citing current Ministry of Revenue and Customs practice - 0% on income up to TOP 12,000, rising to a 25% top rate on income exceeding TOP 70,000, withheld from gross pay with no deductions permitted. Part 4, Division 1 of the primary Income Tax Act confirms individuals are taxed; specific bracket rates are set by Cabinet Order under section 5(1) rather than fixed in the Act text itself. This corrects an earlier unresolved conflict on this page - TaxAtlas incorrectly states Tonga has no personal income tax at all, which is contradicted both by the primary Act and by the specific bracket data found this session.
15% standard Consumption Tax (CT), confirmed via TaxAtlas and independently via Trading Economics (sourced to Tonga's Ministry of Finance and National Planning). The CT functions similarly to a VAT, applying to goods and services supplied within Tonga and to imports; exports are zero-rated and certain essential food items may be exempt or zero-rated.
Per Section 4 of the Income Tax Act (Cap. 26.08), an individual is a resident for a fiscal year if any of three tests is met: (a) has a home in Tonga at any time during the year, (b) is present in Tonga for 183 days or more (aggregate) in any 12-month period commencing or ending during the year, or (c) is a Government employee posted abroad. Meeting any one test makes the individual resident for the whole year, subject to part-year residence rules for the year residency starts or ends. A company is resident if incorporated in Tonga, has its centre of administrative management in Tonga at any time during the year, or is a partnership with a resident partner. A trust is resident if settled in Tonga or has a resident trustee at any time during the year. Residents are taxed on worldwide income (income from all sources within and outside Tonga); non-residents only on Tongan-source income.
No Controlled Foreign Company provisions were found in the Income Tax Act's structure (confirmed by reviewing the Act's full table of contents and anti-avoidance provisions, Part 7 - Sections 66-67 cover transactions between associates and general tax avoidance schemes, but neither constitutes a CFC attribution regime).
Confirmed directly from Section 65A of the Income Tax Act: if a foreign-controlled resident company (other than a financial institution) has a debt-to-equity ratio exceeding 2:1 at any time during a fiscal year, the interest deduction is disallowed on the portion of debt exceeding that ratio, for the period the ratio was exceeded. An exception applies if the company's debt does not exceed the "arm's length debt amount" (what an unrelated financial institution would lend given the company's circumstances) at all times during the year. "Foreign-controlled resident company" means a resident company where 50% or more of beneficial ownership is controlled by a non-resident person, alone or with an associate. The same rule applies to a non-resident company's Tongan permanent establishment, with debt and equity computed by reference to amounts attributable to the PE.
No domestic FBAR/Form 8938-equivalent requiring Tonga residents to self-report their own foreign accounts was identified in the Income Tax Act or other available sources this session. Institutional-level FATCA/CRS participation status was not independently confirmed this session. Separately and independently of Tonga law, US citizens and Green Card holders with Tonga accounts remain obligated to file FinCEN Form 114 (FBAR) once aggregate foreign accounts exceed USD 10,000, and potentially Form 8938, regardless of Tonga's own domestic requirements.
Resolved as none: TaxAtlas confirms Tonga has no double taxation agreements, consistent with its small economy and reliance on development assistance rather than treaty relief. The Income Tax Act's Section 62 foreign tax credit mechanism provides unilateral double-tax relief independently of any treaty, so the absence of DTAs does not leave Tongan taxpayers without any double-tax relief option - it is simply provided domestically rather than via treaty.