Tonga's new 15% consumption tax comes into force this week, on Friday April 1, and the Minister of Finance has announced some goods and services that will be either exempt or zero-rated from Consumption Tax.

1.The following supplies shall be exempt from Consumption Tax:

a)Medical prescription, dental nursing or health services;

b)Educational services;

c)Financial services;

d)Public transport services; and

e)Lease of land for residential purposes.

2.The following taxable supplies shall be subject to a zero rate of Consumption Tax:

a)An export of goods;

b)An export of services supplied for use outside of Tonga;

c)A supply of international transport of goods or passenger services from a place outside Tonga to another place or if the transport or part of the transport is across the territory of Tonga;

d)The supply of goods as part of the transfer of part or whole of a business as a going concern by a registered person to another registered person, provided that the supplier and recipient have;

i.Agreed in writing that part or whole of the business is supplied as a going concern; and

ii.Notifies the Chief Commissioner, in writing, of the details of the transfer, at the date of the transfer on which consumption tax has been credited as input tax.

e)Electricity supplied by any supplier for domestic purposes; and

f)The first 20 cubic meters of water per month supplied by any supplier for domestic purposes.

3.The following shall be exempt from Consumption Tax:

a)Imports which if supplied in Tonga would be an exempt supply under order 1;

b)Imports not exceeding $500 in value accompanying a person arriving in Tonga; or

c)Imports by diplomats according to the law.