The Solomon Islands consist of six major islands and over 900 smaller ones and are located east of Papua New Guinea in Oceania. Together, the islands cover about eleven thousand square miles and are home to over 650,000 people. Solomon Islands have reported a medium increase in GDP over the last decade and are a great place for starting a business. The official language is English.
Disclaimer: This article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
Sole trader in the Solomon Islands
A sole trader is an individual who owns and is managing their business on their own. In the Solomon Islands, a sole trader can be registered under their own name, or they can choose another name for their company and should have only one Tax Identification Number, regardless of whether they’re using their name or “doing business as”. Every business registered in the Solomon Islands must use its designated TIN to make annual tax payments.
How to register a sole proprietorship in the Solomon Islands
All aspiring business owners must register with the Chamber of Commerce in order to obtain a TIN. The following documentation is required in order to register:
- A form of ID
- A business name (if the proprietor is not using their own name to conduct business)
- A completed IR1 form
- Proof of payment of administrative fees
Any potential business owner must submit the IR1 form along with any accompanying paperwork to the Internal Revenue Division of Solomon Islands (IRD).
In addition to this, a sole proprietor should:
- Keep records, or income and expenditure
- Submit forms and returns as required by the IRD
- Pay the right amount of taxes on time
Taxing sole trades in the Solomon Islands
Sole traders must report the income of their business as well as their personal income on their tax report. All of the profits and losses, both business and individual, must be reported to the IRD by March 31st of the following year for the previous year. If, for any reason, the business cannot submit the tax return by the preset date, it is liable for penalties. Each business can ask for an extension on their tax return date, which needs to be approved by the IRD.
A sole trader should use the IR21 Return Form to report their taxes.
As of 2012, individuals are entitled to a tax exemption of $ 15,080, and the total amount of tax due is reduced by this amount. This exemption can be reduced or revoked depending on what part of the year a sole proprietorship does business on the territory of the Solomon Islands.
Tax escalates depending on the income an individual makes in a tax year after the exemption has been deducted from the total amount:
- From 1 to 15000 - 11%
- From $15 001 to $30 000 - $1650 + 23% of excess
- From $30 001 to $60 000 - $5100 + 35% of excess
- From $60 001 and over - $15600 + 40% of excess
The Solomon Islands have a VAT of 10%.
