# Tonga: taxes, residence and cost of living Source: https://domicile.wiki/places/tonga/ (domicile.wiki, researched 2026-10-15). Data licence CC BY-SA 4.0. Research, not tax or legal advice. ## At a glance For an EU-citizen family of five living off a EUR 30M portfolio (the guide's default reader). - Score for a wealthy family: 66 / 100 - Tax on a €30M portfolio: €102,600 a year - Wealth tax: none - Children inherit: tax-free - EU member: no - Currency: TOP - Capital: Nuku'alofa ## Tax on investments, inheritance and wealth 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. - **Ordinary tax residence**: Residents taxed on worldwide business, employment and property income at 0-25%; no tax on private capital gains found. ## Inheritance law and trusts Tonga allows wills, and intestacy gives a widow one third and children two thirds, but no fixed share was found for a will. Land is hereditary and mostly cannot be sold to foreigners. Trust and foundation law and the Hague Trusts Convention were not confirmed. ## Daily life (0-100, higher is better) - Safety and personal security: 79 - Political and institutional stability: 59 - Legal system and property rights: 66 - Healthcare quality and access: 56 - Education quality: 29 - Human development and quality of life: 54 - Infrastructure and connectivity: 67 - Business opportunities and economy: 39 ## 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. ## Residence and succession sources - [HCCH status table, Convention of 1 July 1985 on the Law Applicable to Trusts](https://www.hcch.net/en/instruments/conventions/status-table/?cid=59) — HCCH - [Tonga court decision applying Probate Act s 16 (2004)](https://pacliirms.paclii.org/to/cases/TOLawRp/2004/9.html) — PacLII - [Tonga legislation index](https://landportal.info/issues/3730/organization/landlibrary_resource?page=6) — Land Portal