Venidora Oliveira – The government plans to reform its fiscal policy by introducing a value-added tax (VAT) in order to increase the country's revenue streams and reduce dependence on oil funds.

"We will use the VAT by asking the companies or industries to pay taxes and to increase the country's revenues," said Deputy Minister of Finance Helder Lopes.

The reforms will be undertaken in the political and legal sectors, as well as to administrative regulations. He said the legal sector was in the final phase of improving tax law and preparing the VAT law, which will be a legal basis for enforcing companies to pay taxes.

Apart from that, the government is alsos preparing to introduce new customs procedures. "We are working on how to choose the proper system, so when it is ready we can use it properly," said Lopes.

However, before reforming the fiscal policy, he said the government needed to first reform the economy in order to attract foreign investment to the country by opening up industry and offering jobs to Timorese.

Meanwhile, Member of Commission C (responsible for public finance) MP Florentina Smith said fiscal reforms were important to establish a proper method of tax collection.

He said tax revenues were decreasing every year and the introduction of a VAT system would help improve levels. "Until now, we see that everything is free, the companies do not pay taxes so this has implications for domestic income, that's our concern," he said.

Source: http://www.thediliweekly.com/en/news/capital/13826-fiscal-policy-to-be-reformed-to-boost-revenue