Tuvalu is an island country in Polynesia located between Australia and Hawaii, with a population of over 9000 people in 2024. One of the smallest countries in the world in both population and geographical size, Tuvalu’s economy is centred around fishing and agriculture.

The authorities in Tuvalu require monthly payroll tax contributions for the Tuvalu National Provident Fund (TNPF), with both employers and employees chipping in. The contributions to this fund are allocated to interest-generating investments and providing pension and other benefits.

Tuvalu residents are subject to the Income Tax Act, which requires a deduction from a resident’s taxable income. The income tax percentage ranges from 0% to 30%, depending on how much income is being taxed.

As an Employer of Record in Tuvalu, we conduct onboarding, employee management, payroll, and taxation on your behalf.

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What Is Payroll Tax in Tuvalu?

In Tuvalu, payroll tax refers to the amounts that are contributed every month, as a measure of an employee’s payroll. The payroll tax contributions in Tuvalu are directed to the Tuvalu National Provident Fund (TNPF), which is Tuvalu’s main social fund.

The TNPF was set up as a product of the Provident Fund Act, which was initiated in 1984. Contributions to the fund cater to providing social benefits for Tuvalu residents.

Contributions to the Tuvalu National Provident Fund (TNPF) are compulsory for Tuvalu citizens who are employed and paid for work in Tuvalu, and are between the ages of 15 and 55.

People who are not mandated to join the Tuvalu National Provident Fund (TNPF) but can join voluntarily are:

  • Non-citizens of Tuvalu
  • Self-employed individuals
  • Domestic servants

Our Global payroll tax calculator makes it easy to manage employee payroll in Tuvalu, while factoring in salary rates and the payroll period.

Payroll Contributions

The Tuvalu National Provident Fund (TNPF) requires contributions from employers and employees. The contribution from employees is 13%, while employers need to contribute 10%, making a total of 23% every month.

The combined contribution from employers and employees to the TNPF is split into two main parts:

  • 73.91% is sent to each employee’s Retirement and General Account
  • The remaining 26.09% goes to the employee’s MEDU (Medical and Educational) saving account.

For both employers (10%) and employees (13%), the mandatory contributions need to be made on or before the 15th of the following month.

Payroll Tax Benefits

The purpose of payroll tax contributions to the Tuvalu National Provident Fund (TNPF) is to sponsor benefits that improve an employee’s quality of life. Some notable payroll tax benefits offered to employees in Tuvalu are:

  • Investment Interest: The funds that are contributed to the TNPF are invested. At the end of each year, the TNPF board calculates the profits made by the investments and distributes an interest rate to employees under the TNPF.
  • Retirement Benefit This is a lump sum payment that is available to Tuvalu residents who are 45 years or older upon retirement. Employees can opt for a one-time retirement benefit payment instead of a retirement pension.
  • Retirement Pension: As an alternative to the retirement benefit above, employees who are 45 years or older can earn a retirement pension after retirement.
  • Incapacity Benefit: The incapacity benefit is a lump sum payment available to employees who are no longer able to work due to physical or mental reasons.
  • Emigration Benefit: Tuvalu offers an emigration benefit as a lump sum payment to residents who are about to leave or have left the country permanently.
  • Woman’s Home Benefit: When a female employee in Tuvalu needs to leave formal employment to cater to her husband or children, the TNPF provides a lump sum payment.
  • Death Benefit: In cases where an employee dies, the TNPF offers a lump sum death benefit to the dependent of the late employee.

Employer and Employee Responsibilities

Employer Responsibilities

As an employer or business owner, if you are looking to hire employees in Tuvalu, you need to be aware of the responsibilities they are mandated to handle for payroll tax.

Before payroll tax contributions begin, employers need to have a company legally registered with the Government, after which they can register with the TNPF and make contributions.

Employers are responsible for registering themselves and their employees with the Tuvalu National Provident Fund (TNPF).

As an employer, to register yourself with the TNPF, you need to download and complete the Employer Registration Form, then submit it at a TNPF office. The components of the form include the names and addresses of the employer and the business.

After submitting the form and completing registration, you will receive a unique employer registration number.

Your next responsibility as an employer is to register your employee(s) using the Member’s Registration Form. This form contains details like an employee’s name, address, date of birth, and nationality.

Employee Responsibilities

In addition to the mandatory employee contributions, employee responsibilities include filling out the Nomination Form after the employer registers the employee with the TNPF.

The purpose of the Nomination Form is to delegate the employee’s funds to loved ones in case of the employee’s death.

Overview of Income Tax in Tuvalu

In 1982, the government of Tuvalu passed the Income Tax Act, which includes the determination, administration, and collection of income tax. The purpose of income tax deductions in Tuvalu is to aid the government’s funding of important functions like healthcare, social services, and education.

Personal Income Tax

Income tax in Tuvalu is calculated as a percentage of the amount a person earns. There are several laws and requirements for income tax in Tuvalu, as the government has provisions for various forms of income.

When it comes to personal income tax for employees resident in Tuvalu, the income tax percentage depends on how much an employee makes. This table contains the basic figures.

Yearly IncomeIncome Tax Percentage
AUD 10,000 or less0%
AUD 10,001 – AUD 14,00015%
More than AUD 14,00030%

For other forms of income tax, here are the required percentages:

Income CategoryIncome Tax Percentage
Taxable income of an administrator, trustee, or executor of a trust or estate30%
Taxable income of approved funds resident in the country15%
Taxable income paid to a non-resident for work done in Tuvalu40%
Taxable income of a trade union resident in Tuvalu30%
Taxable income of a local authority resident in Tuvalu30%
Taxable income of a company resident in Tuvalu30% – 40%

Exemptions to Income Tax

The government of Tuvalu exempts some forms of income from income tax, including:

Dividends

If a company decides to give its employees or shareholders a percentage of yearly profits, each Tuvalu resident is not required to pay income tax on the dividend.

Personal Benefits

When an employee receives personal benefits and allowances, there is no need to pay or deduct income tax. Examples of personal benefits that are exempt from income tax are:

  • Travel allowance
  • Accommodation allowance
  • Subsistence allowance
  • Scholarships
  • Benefits gained from volunteer work for non-profit organisations
  • Gratuity
  • Refunded income tax credits

Business Benefits

The various business benefits that are exempted from income tax in Tuvalu are:

  • Income from the sale of copra (coconut flesh) cut in Tuvalu
  • Income from the sale of handicrafts and fish by Tuvalu residents
  • Income generated by any of these organisations:
    • Educational, charity, religious, amateur sporting, or cultural organisations
    • Community service organisations
    • Trade unions
    • Local authorities

Unpaid Income Tax

In cases where income tax in Tuvalu remains unpaid even after the due date (15th day of the following month), the Taxation Officer can temporarily close down a business.

The authorities in Tuvalu charge a penalty of AUD 500 for unpaid tax. In addition to the penalty, there will be a 1% interest rate for each month that the tax remains unpaid.

Every additional 3-month delay will result in an extra penalty worth 5% of the income tax that should be paid.

Sales Tax

In addition to the Income Tax Act, Tuvalu has a Sales Tax Act that governs the sale of all products and goods in the country, excluding real estate and imported goods.

Apart from certain exempted products, the Sales Tax is 2.5% for all other goods. Some of the tax–exempt products in Tuvalu are:

  • Kerosene
  • Flour
  • Rice
  • Bar Soap
  • All goods manufactured in Tuvalu where the cost of manufacturing is not more than AUD 5,000
  • Goods under the categories 911.01 and 931.02 in the country’s Customs Import Duty Tariff

Simplify Payroll and Tax Compliance in Tuvalu

At Remote People, we offer streamlined Employer of Record (EOR) and Professional Employer Organisation (PEO) services, freeing you of the burden of employee management.

When you partner with us, we help you manage employee payroll, while deducting payroll and income tax rates in compliance with Tuvalu’s laws.