Tonga

Research notes

Tonga — family-office tax dossier

Last reviewed: 2026-10-15 Tax year: 2026 Reviewer: research agent (Claude), unreviewed by a tax adviser

Summary

Tonga taxes residents on worldwide income at up to 25%. The Income Tax Act 2007 has no capital gains tax: only gains on business assets are taxed, so a private investor's gains appear untaxed (low confidence). Dividends from Tongan companies are exempt; foreign dividends are property income taxed at up to 25% with a foreign tax credit. No inheritance, gift or wealth tax was found.

US citizens: US citizens remain subject to US federal income, estate and gift tax on worldwide income and assets wherever they live; the app adds the federal layer. Where local tax on portfolio income is nil there is nothing to credit against US tax.

Residence and eligibility

Income Tax Act 2007 s. 4(3): resident if the individual has a home in Tonga at any time during the year, is present 183 days in any 12-month period commencing or ending in the year, or is a government employee posted abroad. Part-year rules apply on arrival and departure.

• Residence permit (EU, US, OTHER): Not researched.

Capital gains

Standard regime

No capital gains tax. Gross income consists of business, employment, property and other income (s. 11); gains are taxed only on disposal of a business asset (s. 12(c)). Gains on a privately held portfolio, private company shares or a non-business property appear outside the tax.

• Important exceptions, statute references and announced changes: s. 44(5): transmission of an asset by succession or under a will is treated as a disposal by the deceased (relevant to business assets). Business assets include any asset used or held ready for use in a business.
• Tax year / confidence / verification: 2026 / low / partially_verified (checked 2026-10-15)
• JSON numbers: headline 0% (0.0); listed domestic 0% (0.0); listed foreign 0% (0.0); private business sale 0% (0.0); local real estate 0% (0.0); foreign real estate 0% (0.0).
• How derived: Income Tax Act 2007 s. 11-14: only gains on disposal of business assets are in business income; no other charge on gains found. Assumes the family is a passive investor and not 'conducting a business'.
• Trader recharacterisation: If investing amounted to a business, gains on business assets would be business income at up to 25%. A rented property could be a business asset.
• Foreign assets: Residents are taxed on worldwide income (s. 11(2)), but private capital gains are not income.

Dividends

Standard regime

A dividend paid by a resident company to a resident person is exempt (s. 21). Foreign dividends are property income of a resident (s. 14), taxed at the individual rates (25% above TOP 70,000 from July 2021), with a foreign tax credit (s. 62).

• Exemptions and thresholds: Individual rates from July 2021 (Ministry page): 0% to TOP 12,000; 10% to 30,000; 15% to 50,000; 20% to 70,000; 25% above 70,000. The 2017 Order set the rates on 'chargeable income of an individual' (then 0/10/20/25%).
• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON numbers: headline 25% (0.25); domestic 0% (0.0); foreign gross 25% (0.25); foreign tax relief: credit.
• How derived: Domestic: s. 21 exempt = 0. Foreign: top individual rate 25% before the s. 62 foreign tax credit.
• Outbound withholding: 15% non-resident withholding on dividends, interest, royalties and fees (s. 79; Ministry page).
• Treaty network: No comprehensive tax treaties found (not verified). US dividends bear 30% US WHT, creditable up to Tongan tax.

Inheritance and gifts to children

Standard regime

No inheritance, estate or gift tax was found. Under the Income Tax Act, transmission of an asset on death is a deemed disposal by the deceased (s. 44(5)), but only gains on business assets are taxable.

• Tax year / confidence / verification: 2026 / low / unverified (checked 2026-10-15)
• JSON numbers: basis none; children fully_exempt; exemption 0; brackets []; other transfer costs 0.0.
• Gift tax: No gift tax found.

Wealth tax

Standard regime

No net wealth tax and no recurring levy on financial assets.

• Tax year / confidence / verification: 2026 / medium / partially_verified (checked 2026-10-15)
• JSON: type none.
• Property tax (not a wealth tax): Not researched.

Special regimes

None found for wealthy new residents.

Company taxation (kept separate from personal tax)

Headline rate in JSON: 25% (0.25). Resident and non-resident companies pay 25% on chargeable income (Ministry of Revenue and Customs). Partnerships are taxed as companies. Dividends between resident persons exempt.

Cost of living notes

Not sourced.

Open questions

• Residence routes not researched.
• [standard/capital_gains] No official statement that Tonga does not tax private capital gains was found; the 0% is an inference from the Act's income definitions.
• [standard/capital_gains] Amendments to the Income Tax Act since 2007 were not reviewed.
• [standard/dividends] The July 2021 rate table is published on the employee page; that it applies to all chargeable income of individuals is inferred from the 2017 Order.
• [standard/inheritance] No official statement on the absence of estate/gift duty found.
• [standard/inheritance] Land in Tonga cannot be owned freehold by foreigners (leases only; general knowledge, not verified).

Sources

• Income Tax Act 2007 (Act No. 10 of 2007): https://www.revenue.gov.to/sites/default/files/inline-files/IncomeTaxAct2007.pdf
• Company, partnership, cooperative society, trust: https://www.revenue.gov.to/company-partnership-corporative-society-trust
• Income Tax (Amendment) Order 2017 (individual rates): https://www.revenue.gov.to/sites/default/files/inline-files/IncomeTax%28Amendment%29Order2017%28FinalEnglish%29.pdf
• Individual - employee (tax rates from July 2021): https://www.revenue.gov.to/individual-employee
• Non-residents and visitors (residence tests, withholding): https://www.revenue.gov.to/non-residents-and-visitors

Change log

• 2026-10-15: initial research.