The Nauru Revenue Office (NRO) is taking significant steps to strengthen relationships and improve tax compliance among the Chinese business community.
Chinese-owned businesses play a vital role in Nauru’s economy.
With the guidance of Tax Reform Adviser Mark Keeley and Deputy Secretary Colin Hutchins both deployed by the Australia-Pacific Partnerships Platform, and through the hands‑on work of frontline staff such as Heartson Scotty and Massie Detenamo, the NRO has made major strides in communication, taxpayer education, engagement and compliance outcomes.
This work required patience, creativity and a willingness to learn.
But the results are beginning to show: better understanding, improved record‑keeping, increased voluntary compliance and a growing sense of trust between the NRO and the Chinese business community.
Breaking language barriers
One of the biggest challenges to effective tax compliance has been communication. Many Chinese business owners speak limited English, while NRO staff do not speak Mandarin, making even basic tax conversations difficult.
To overcome this, Senior Tax Auditor Heartson Scotty introduced a simultaneous translation app using earpiece devices and a phone-based translator. While not perfect, it has proven effective. “They start off not understanding, and then suddenly the message gets through,” Heartson explained.
Other tools include:
- Microsoft Word translation, where staff type questions that convert into simplified Chinese
- Google Translate for quick clarifications
- Whiteboard diagrams, drawings and figures
- A hybrid Nauruan/English/Pidgin speaking style many Chinese taxpayers have learned to understand
Deputy Secretary Colin noted that the NRO uses “all the tools available to ensure effective communication,” because fairness depends on understanding.
The NRO has been proactive in ensuring Chinese taxpayers visiting the office are well informed through notices in Mandarin.
Educating for compliance
Education is central to NRO’s strategy. Under the leadership of Lita, Manager of Taxpayer Services, the NRO has translated a wide range of materials into simplified Chinese, including:
- Question and Answers Guide for the Chinese Community
- Guide for transitioning from SBT to BPT
- Taxpayer Alert: Obligations for the Chinese Community
- Business Individual Return (Chinese version)
- Quarterly Business Return (Chinese version)
Introduced in the 2024 tax period, these resources have already made a difference. Staff spend time explaining concepts like depreciation, allowable expenses, and proper record-keeping. In some cases, officers have even reconstructed financial records to help taxpayers understand how to file correctly.
Colin describes the process as “a journey” guided by NRO’s Customer Charter, which outlines what taxpayers can expect: respect, clarity and fairness.
Compliance and early successes
Many businesses have historically kept incomplete or handwritten records, making it difficult to verify sales, purchases and expenses.
With no professional accounting bodies on the island, the NRO often finds itself mentoring taxpayers while also reviewing their compliance. Key activities include:
The NRO conducts:
- Record‑keeping checks
- One‑on‑one audits (covering 10% of the population of ~100 businesses)
- Weekly interviews with taxpayers
- Public education campaigns
When deficiencies are found, taxpayers receive letters outlining improvements. Penalties remain minimal for now, but as Tax Reform Adviser Mark Keeley notes, “The businesses will need warning letters in their own language. In 2 years, there will be heavier penalties. We want taxpayers to know we are being fair. If they falsify returns, there are consequences, but we also give them every tool and every chance to comply.”
Behaviour is already changing. Many taxpayers who previously declared very low income are now self-reporting more accurately.
Colin adds that the NRO has learned a great deal from these interactions. In one case, a taxpayer used the translation tools to explain a spreadsheet error that would otherwise have resulted in an overcharge.
Building capacity within NRO
The work has also transformed the NRO internally. Staff competencies have risen dramatically, “tenfold,” according to Colin, thanks to weekly training sessions. Officers now learn techniques such as:
- Indirect income estimation methods
- Margins and sources of funds analysis
- Formula‑based approaches to incomplete records
“It’s been eye‑opening. The training sessions have taught us so much and helped us put our learning into practice,” reflected Heartson.
Director of Compliance, Massie Detenamo added that these efforts are helping her as she oversees her team to deal with non-compliance issues. “We are learning more as a team to promote and provide guidance to taxpayers. Talking to them every week and getting to know them better helps build trust.”
The NRO’s first audit took six months. Now, with improved skills and tools, the team can complete an audit in just one month.
Looking ahead
The NRO, in partnership with the Asian Development Bank and the World Bank, will hold public education seminars in February 2026. The plans are to bring in a bilingual Mandarin‑speaking tax specialist to lead the sessions which will:
- Walk taxpayers step‑by‑step through their obligations
- Demonstrate how to complete tax returns
- Explain consequences of falsifying returns
- Provide a safe space for questions
- Strengthen trust and transparency
