Taxing Authority

Income Tax and Value Added Tax (VAT) is levied by the government under the Income Tax Act of 1974 and Value Added Tax Decree of 1991 respectively. The Act and Decree are administered by the Commissioner of Inland Revenue.

Principal Taxes
The major forms of taxes of the government are:

• Income tax comprising normal tax and withholding tax on individuals and companies
• Value Added Tax (VAT)
• Customs and Excise Tax

Other Taxes

• Land sales tax
• Departure tax
• Stamp duty
• Gambling turnover tax
• Hotel turnover tax

Deductions at source

• Pay As You Earn (PAYE)
• Provisional tax on contract for services
• Interest withholding tax

Income Tax Rates – Individuals and Companies
Individuals (Sole Trader and Partners of Partnerships/Joint Ventures) are liable for normal tax which is payable on “chargeable income” i.e. total income less personal allowances.  The top marginal rate of tax is 31 percent.

The rate of Fiji income tax on the chargeable income of resident and non-resident companies carrying on business in Fiji is currently 31 percent with effect from 1 January 2004.

Withholding and Other Taxes

Dividend
As from 1 January 2001 withholding tax on dividends is not applicable where dividend is  declared, paid or credited from retained earnings which have been fully subjected to corporate tax.  Hence any dividends payable from retained earnings which have not been fully subjected to corporate taxes shall be subject to tax in respect of the non qualifying proportion.

Tax is not payable in respect of any dividends paid by a locally incorporated company to another locally incorporated company.

Dividend tax is not payable by non-resident companies on branch profits repatriated out of Fiji.

Royalties
Royalties paid to non-residents are subject to 15 percent royalty withholding tax deducted at source.

Know-How Payments and Management Fees
A withholding tax of 15 percent is levied on gross management fees and any Know-How payment paid or credited to a non-resident. A Know-How payment is defined as any payment for scientific, technical, commercial or industrial information, techniques, knowledge or assistance likely to assist in the carrying on of a business, or in the manufacture for processing of goods or materials or in the working of mines, oil wells or other sources of mineral deposits, or in the carrying out of any agriculture, forestry or fishing operations.

Film Hire or Rent
A 15 percent withholding tax is due on payments made to a non-resident for the hire or rental of films and any amounts paid for the use of such films whether by way of purchase or long-term hire.

Other Taxes

Provisional Tax on Contacts for Services
Provisional tax must be deducted at the rate of 15 percent on any payments arising under any contract for services, including progress payments under any such contract, and remitted to the Department of Inland Revenue. For a contractor to be exempt from the deductions, he must obtain from the Commissioner of Inland Revenue, a certificate of exemption or, alternatively apply to obtain an approval for a lower rate of deduction if he considers excessive tax is deducted at source.

Land Sales Tax
There is no capital gains tax but property transactions may be subject to either income tax under Section 11a of the Income Tax Act, or to land sales tax under the Land Sales Act. 

Property transactions may be subject to income tax under Section 11a where the Inland Revenue Services deem that the profits are derived from the carrying on or carrying out of profit making schemes or undertakings; or where the property was acquired for the purpose of resale.

Where not applicable to income tax, the profits arising from the sale of undeveloped land in Fiji, or, the profit derived from the carrying on, or carrying out, of any scheme or undertaking connected with the disposition of land may be subject to land sales tax. Land sales tax applies progressively, maximizing at the rate of 30 percent on profits in excess of F$9,500.

 Value Added Tax (VAT)
VAT is levied on all goods and services at the rate of 12.5 percent effective from 1 January 2003. All businesses with a turnover of F$30,000 or more in respect of goods and F$15,000 or more for services are required to register with the VAT unit and must charge 12.5 percent VAT on the price of all the goods and services supplied. Monthly or quarterly VAT returns must be lodged with the VAT office and, payments are made by the end of the month following the month of the VAT return.

The following are exempt from VAT:

• Financial services (banking services, insurance services, dealing in stocks, granting of credit)
• Rents from residential dwellings
• Supply of education (including goods and services incidental to education by an educational institution)
• Donated goods sold by non-profit bodies

Zero Rated Supplies
Certain types of taxable supplies are taxed at the rate of zero percent VAT. Zero rating should not be confused with exemption. Registered persons who make zero-rated supplies do not charge VAT on these supplies, while being eligible to claim input tax deductions. In the case of exempted supplies, no input tax deductions can be claimed.

Zero-rating
Applies to:

• Sale of going concerns
• Exported goods
• Certain exported services 
• Basic food items. i.e. tinned fish, flour and sharps, powdered milk, edible oil, rice and tea
• First $30 of electricity bill for residential dwelling only

Departure Tax
Departure tax is F$40 for persons over 12 years of age (except for short-term transit passengers)

Stamp Duty
Stamp duty is payable at rates laid down in the Stamp Duties Act on specified written documents.

Indirect Taxes
The principal types of indirect taxes are fiscal, excise and excise import duties. Fiscal duties are levied on goods entering Fiji and are charged at the rate of either 0 percent, 3 percent, 15 percent, and 27 percent in accordance with the Customs Tariff Act 1986.The rate varies depending on the nature of goods, e.g. luxury and semi-luxury items such as motor vehicles, electrical appliances, liquor attracts the heaviest duties. Duties on motor vehicles range from 27 percent for new ones and specific rate ranging from $5,550-$14,140 depending on the engine capacity for used ones. Raw materials may be allowed duty-free entry if prior approval is obtained from the FTIB.

Excise duty is principally charged on certain locally manufactured goods such as cigarettes, beer and spirits.
A new import excise duty was introduced in 2006 and charged on importation of certain goods. It is charged at a rate of 15 percent on motor vehicles and sin goods such as tobacco extracts, wines and spirits and 10 percent on white goods such as washing machine and television.

Gambling Turnover Tax
A 25 percent gambling turnover tax is levied on total gross ticket sales of gambling activities e.g.

• Betting (at or through licensed betting houses)
• Tattslotto
• Lotteries (purchase of lottery tickets)
• Other forms of gambling

Hotel Turnover Tax
Hotel turnover tax applies at the rate of 5 percent on the turnover of hotels including accommodation, food and beverages, and other services supplied by the hotel to its guests.  Services that are not operated or provided by the hotel shall not be subject to hotel turnover tax, such as, services supplied by concessionaires.

Further details of Fiji’s tax system can be obtained from the Fiji Islands Revenue and Customs Authority and Chartered accountants.

For further information, please contact:
Customer Enquiry Centre
Level 1 Waisomo House
Thurston Street, Suva
Ph: 33312800 • Fax: 3304936
(Source: FIRCA)

Accounting Firms
 
Fiji has a body called the Fiji Institute of Accountants, membership of which is open to local and overseas qualified graduates with an accounting major.  Appropriate degrees with sufficient practical experience and additional core post graduate units are the prerequisites which lead to admission to the Institute as a chartered accountant. Fresh graduates may become provisional members. Certificates of public practice, which requires further practical experience, will need to be acquired from the Institute before establishing a public practice.  Services offered by various accounting firms include accounting, auditing, taxation, management consultancy, financial consultancy, business establishment and restructuring, project set-up and development, information technology, secretarial, marketing and economic studies, mergers and acquisitions and recruitment. Most international firms are represented in Fiji. There are also local practitioners providing accounting, auditing, taxation and other professional services.
(Source: Fiji Institute of Accountants)

Law Firms
Lawyers need to be admitted as legal practitioners and hold a valid and current practising certificate from the Fiji Law Society, before they can carry on practice and provide legal services. All lawyers in private practice are required to be members of the Fiji Law Society, membership of which is also open to other barristers and solicitors not practising on their own.
(Source: MUNRO LEYS Lawyers & Notaries Public)