Cost of living is very affordable. Rent (index: 26.6), groceries (index: 45.5), and restaurant prices (index: 37.6) are significantly lower than in major global cities. Inflation was around 2.2% in 2024, down from higher rates in 2022-2023.

The rental market is very affordable (Rent Index: 26.6). While specific property price to income data is unavailable, the overall low cost of living and developing economy suggest an affordable housing market.

Purchasing power index data is unavailable. Based on a relatively low GDP and a Human Development Index of 0.607, average income and purchasing power are considered low. The economy is heavily reliant on the Petroleum Fund.

The tax system is generally favorable. Corporate income tax is a flat 10%. Personal income tax for residents is 0% up to $6,000 annually, with a 10% wage income tax on monthly income exceeding $500. There is no VAT, but a 2.5% sales tax applies to imported taxable goods, while domestic goods and services are generally 0%. There are no property taxes.

Timor-Leste ranked 181st out of 190 economies in the World Bank's 2020 'Ease of Doing Business' report, indicating a challenging environment. While the government is committed to improving the regulatory framework and offers investment incentives, progress is slow due to bureaucracy, limited human capacity, and inadequate infrastructure. Timor-Leste joined the WTO in February 2024.

Timor-Leste has a national social security system established in 2016, providing old-age, disability, and survivor pensions. Maternity and unemployment benefits are also part of the system. There is a public healthcare system, though quality varies. Efforts are ongoing to expand coverage, including for informal workers.

The Central Bank of Timor-Leste (BCTL) supervises the banking sector, which is considered stable with sound capital and liquidity levels. The US dollar is the official currency. However, there is no explicit national deposit insurance scheme with a stated coverage limit for depositors in Timor-Leste. The banking sector includes branches of foreign banks, which adds some stability.