Just like the soft sand that surrounds our nation, Fiji offers fascinating foreign investment incentives

Fiji, renowned with its Fijian hospitality has over the past years formulated investment induced incentives provided to investors that will ensure ventures to flourish 

The new 2009 tax incentives are administered by the Fiji Islands Revenue and Customs Authority. In addition to the 29 per cent corporate tax rate, other attractive incentive packages are offered for the various sectors including Tourism, ICT, Agriculture, Forestry, Fishing, Manufacturing, Mining and the new tailor-made incentive packages for the tax free regions.

2009 INVESTMENT PACKAGE

TAX RATE REDUCTION

YEAR	RESIDENT COMPANIES	NON-RESIDENT COMPANIES
2001	From 35% to 34%	From 45% to 34%
2002	From 34% to 32%	From 34% to 32%
2003	No change - 32%	No change - 32%
2004	From 32% to 31%	From 32% to 31%
2005-2008	No change - 31%	No change - 31%
2009	From 31% to 29%	From 31% to 29%
2010	From 29% to 28%	From 29% to 28%

INVESTMENT ALLOWANCE

• 40% deduction for investment allowance can be claimed between
  2001 and 2010 (both years inclusive) in respect of qualifying
  expenditure relating to the following investment activities: -

1) an agricultural, forestry or marine resources business;
2) an information technology business; or
3) a rural manufacturing business.

• 60% deduction for investment allowance can be claimed between
  2009 and 2012 in respect of qualifying expenditure in Fixed Line
  Next Generation Network;
• “Qualifying expenditure” means expenditure of at least $50,000
  on the acquisition of capital assets excluding land or building, a
  passenger vehicle or trading stock; and
• “Fixed Line Next Generation Network” refers to items listed under
  Part VIII B of the Income Tax (Allowance for Depreciation and
  Improvements) Instructions 1998.

ACCELERATED DEPRECIATION

• Accelerated depreciation for building erected before 2001 has
  been extended to 2010. 20% depreciation for building used for
  agricultural, commercial or industrial purpose can be written off
  within any 5 of 8 years;
• 100% write off will be available in the year the expenditure was
  incurred on water storage facilities and renewable energy plant
  and machineries; and
  100% write-off is available for investment in Fixed Line Next
  Generation Network in the year 2009.

EXPORT INCOME DEDUCTION

• “Export income” means net profits derived by a taxpayer from the
  business of exporting goods and services but excludes re-exports.
  Deduction shown below.

Year of assessment	Percentage of export income to be deducted
2001 and 2002	100%
2003 and 2004	75%
2005 and 2006	50%
2007 and 2008	50%
2009 and 2010	50%

• Export income deduction will only be allowed if the Commissioner
  of Inland Revenue is satisfied that the export earnings will be
  remitted to Fiji.
  

LOSS CARRIED FORWARD

• Loss carried forward extended from 6 to 8 years. Loss carried
  forward by a company can now be allowed if that entity satisfies
  the continuity of ownership test or the same business test.
  

DIVIDEND EXEMPTION SYSTEM

• Shareholders no longer subject to tax on profits that have already
  been fully taxed at the company level; and
• Exemption from tax at the shareholder level is to be based on
  percentage of dividends subject to tax at company level. This
  percentage is calculated by a formula, which also incorporates a
  notional tax credit or deemed tax paid in relation to a few of the
  concessions.
  

DUTY CONCESSIONS
PRODUCTION INPUTS

• All goods used as raw materials in the manufacture of approved
  goods will attract 3% fiscal duty + 12.5% VAT.

CAPITAL ITEMS

• Duty rates on capital items (which refer to machinery used for
  converting / processing raw materials) will attract 5% fiscal duty
  + 12.5% VAT.

DUTY SUSPENSION SCHEME

• Enables exporters to have access to inputs without having to pay
  for duties upfront;
• Imported goods are conditionally relieved from payment of fiscal
  duty and VAT on the basis that such goods will be substantially
  transformed through manufacturing or processing and subsequent
  exportation;
• The Scheme would entitle exporters to import duty free an amount
  equal to the proportion of approved imported inputs required to
  produce exports. This is called Entitled Proportion (EP); and
• Administered by the Exporters Club, which is a private sector led
  organization.

HOTEL INDUSTRY INCENTIVES

Come, invest in our tropical paradise of beautiful sun drenched islands, sandy beaches and take advantage of the various investment incentives available to investors. The industry offers a wide range of services and facilities to suit the needs of the target markets ranging from backpackers to up-market tourism products

Standard Allowance

• Investment allowance (in addition to ordinary depreciation) of
  55% of total capital expenditure is allowed as a deduction provided
  there is no shift of tax revenue to other countries;
• Applicable to building of new hotel including renovations or
  refurbishments or extensions of existing hotel and International
  Retiree Facilities;
• Investment Allowance can only be written-off against the income
  of the hotel business or income from the hotel premises; and
• Losses carried forward extended to 13 years.

New Short Life Investment Package

• 10 year tax holiday for capital investments not less than $7
  million;
• Import duty exemption on all capital goods (including capital
  equipment, plant & machinery) not available in Fiji that is used in
  carrying out the investment; and
• Short Life Investment Package (SLIP) Incentives is also available
  for retirement facilities and hospital resorts.

AUDIO VISUAL INCENTIVES
INCOME TAX DEDUCTIONS

• 150% deduction for capital expenditure on an F1 audio-visual
  production.
• 125% deduction for capital expenditure on an F2 audio-visual
  production.

INCOME TAX EXEMPTION

• Net income from an F1 production is exempt until taxpayer has
  received a 60% return on capital expended. Thereafter, net
  income will be fully taxed at the marginal rate.
• Net income from an F2 production is exempt until taxpayer has
  received a 50% return on capital expended. Thereafter, net
  income will be fully taxed at the marginal rate.

STUDIO CITY ZONE CONCESSIONS

• Any sole proprietor, partnership or company that carries on a
  production activity (the production of, distribution of or supply of
  services to audio-visual productions) may qualify for an operating
  licence in the Studio City Zone and be entitled to an exemption
  from tax on the income from the production activity carried on in
  the Zone;
• Tax free status for “permanent residents” of the Studio City Zone
  on income derived as earnings from audio-visual productions;
• For residence in the Zone to be approved, in the case of citizens,
  the individual must be:-
  • resident in the Zone for at least 183 days;
  • have pre-tax audio visual earnings in excess of $100,000;
  • have fixed assets in the Zone in excess of $250,000; and
  • maintain a primary place of residence in the Studio City
    Zone.
• For residence in the Zone to be approved, in the case of non-
  citizens (or a citizen who derives a minimum of 80% of audio
  visual earnings from outside Fiji), the individual must be: -
  • resident in the Zone for at least 60 days;
  • have pre-tax audio visual earnings in excess of $100,000;
  • have fixed assets in the Zone in excess of $250,000; and
  • maintain a permanent place of residence in the Studio City
    Zone.

FILM TAX REBATE

Summary Part IV, 6th Schedule – Income Tax Act

	Fiji Film Tax Rebate Bill
Rebate Amount	35% tax rebate or credit on production costs spent in Fiji: paragraph 65-10
Elibibility	Films and television productions, as per existing Sixth Schedule: paragraph 65-15
Minimum spent in country	Minimum spent in Fiji F$250,000: paragraph 65- 15(1)(f)
Minimum % of budget to be spent in country	35% of total budget up to F$25 million: paragraph 65-15(1)(g)(i). If more than F$25 million is spent in Fiji, the production qualifies for the tax rebate regardless of the percentage of the total budget that it represents: paragraph 65-15(1)(h)
Maximum rebate	F$8.75 million, so even if more than $25 million spent in Fiji the maximum rebate is still F$8.75 million: paragraph 65-10(2)
Exclusions	Where a producer has chosen to access the film tax rebate, the producer will not be able to obtain any other tax concessions under Parts II and III of Sixth Schedule: paragraph 65-5(2)

 

AGRICULTURE INCENTIVES

200% Deduction on Capital Expenditure

• The activity under this assistance will include listed items under
  Paragraph 32 of PART V of the Depreciation Schedule;
• Also includes the purchase of farm implements and plant &
  machinery used on the farm as well as cost of irrigation; and
• The incentive will be available to all taxpayers not enjoying other
  concessions under the Income Tax Act. The concession will be
  available for 5 years effective from 1/1/06.

Commercial Agriculture and Agro-Processing

New Businesses from 2009 onwards

• The income of any new activity in commercial agricultural farming
  and agro-processing approved and established between 1 January
  2009 to 31 December 2009 shall be exempt from tax as follows:-
  • Capital investment from $250,000 to $1,000,000, for a period
    of 4 consecutive years; or
  • Capital investment from $1,000,000 to $2,000,000, for a period
    of 7 consecutive years; or
  • Capital investment above $2,000,000, for a period of 10
    consecutive years.
• The income of any new activity in commercial agricultural farming
  and agro-processing approved and established from 1 January
  2010 to 31 December 2014 shall be exempt from tax for 10
  consecutive fiscal years with a capital investment of $2,000,000
  or more.

Existing Businesses in Vanua Levu

• 200% tax deduction of the amount of capital spent can be claimed
  by any existing legal entity in Vanua Levu that is engaged in
  commercial agricultural farming and agro-processing as approved
  by the Commissioner under Section 17(76). The incentive is only
  available to taxpayers:-
  • Who do not enjoy other incentives under the Income Tax Act;
  • The capital investment is more than $250,000; and
  • For a period commencing 1 February 2009 and ending 1 March
    2010.

Bio – Fuel Production

• 10 year tax holiday is available to a taxpayer undertaking a new
  activity in processing agricultural commodities into bio-fuels
  as approved by the Commissioner from 1 January 2009 to 31
  December 2014. To qualify, the taxpayer must have:-
  • Minimum level of investment of $1,000,000; and
  • Employ 20 local employees or more for every income year.
• Duty free importation of plant, machinery and equipment for initial
  establishment of the factory.
• Duty free importation of chemical required for bio-fuel
  production.

SMALL AND MICRO ENTERPRISES (SME's)

Income tax exemption to be applicable to selected sectors with
maximum turnover threshold of $300,000. The sectors include:

• Agriculture and Fishing (Sugarcane Farmers; Coconuts; Rice;
  Ginger; Yaqona; Fishing; Raising Livestock; Vegetable; dalo,
  cassava and other root crops production; farming and Bee
  keeping);
• Tourism (Sea Cruise and River tour Operators);
• Community and Social Services (Amusement, recreation services;
  traditional handicraft producers (not “middleman” or agents); and
• Supportive projects to tourism industry (flora, fauna and other
  natural characteristics of Fiji; and history, traditions, cultures and
  ways of life of its peoples).

TAX FREE REGION INCENTIVES

The Northern and the maritime Islands endowed with undisturbed rich natural resources; need to be developed and assisted fully. In encouraging investment, supporting development and creating employment opportunities in the North and maritime islands, government has declared Vanua Levu, Rotuma, Kadavu, Taveuni, Levuka, Lomaiviti, Kioa, Rabi and Lau as tax free regions.

• This incentive is available to a newly incorporated entity engaged
  in a new trade, business or manufacture established in the
  following areas:-
  • Vanua Levu – includes Taveuni, Rabi, Kioa and other islands
    generally included for government’s administrative purpose as
    being in the Northern Division;
  • Rotuma;
  • Kadavu;
  • Levuka;
  • Lomaiviti; and
  • Lau.
• Any company may apply to the Minister for Finance in a prescribed
  form for an operating license.

Criteria for Grant of License

• The company is a newly incorporated entity engaged in a new
  trade, business or manufacture; and
• The minimum initial level of investment should be $500,000 in
  2009 and $2,000,000 from 1 January 2010.

Tax Exemptions Available

i) The income of any new activity approved and established between
1 January 2009 to 31 December 2009 shall be exempt from tax as
follows:

• capital investment from $500,000 to $1,000,000, for a period of
  5 consecutive fiscal years; or
• capital investment from $1,000,000 to $2,000,000, for a period
  of 7 consecutive fiscal years; or
• capital investment above $2,000,000 for a period of 13
  consecutive fiscal years.

ii) The income of any new activity approved and established from
1st January 2010 shall be exempt from tax for a period of 13
consecutive fiscal years with an initial capital investment of
$2,000,000 or more.

Duty Exemption

Import duty exemption on the importation of raw materials,
machinery and equipment (including parts and materials) in so far
as they are required for the establishment of the business in the Tax
Free Region.

Other benefits under the TFR:

• Additional 5 years of income tax exemption is available to any
  company granted a license and having indigenous Fijian landowner
  equity of at least 25 percent;
• Additional 7 years of income tax exemption is available to any hotel developer granted a license and having indigenous Fijian landowner equity of at least 25 percent.

VANUA LEVU TAX INCENTIVES

The incentives are applicable to existing businesses in Vanua Levu
provided that there is an increased sale by 25% or more and 5 new
persons are employed from 2006.

• The package entails the following: -
  • 300% Tax Deduction on Capital Expenditure until 31 December
    2010; and
  • 100% Tax Exemption Export Incentive until 31 December
    2010
• Vanua Levu also includes Taveuni, Rabi, Kioa and other islands
  generally included for government’s administrative purpose as
  being in the Northern Division.

INFORMATION COMMUNICATION TECHNOLOGY (ICT) INCENTIVES

Fiji is well positioned to attract ICT investments, ranging from the lower end ICT operations, moving up the value chain.  Fiji has managed to secure its position in attracting renowned ICT investors to locate their back offices offshore.  The following incentives has been offered to the ICT sector by the Fiji Government in its continuous efforts to promote the sector.

i) The income of an Income Communication Technology (ICT)
operator operating in the declared Kalabu Tax Free Zone from 1
January 2007 to 31 December 2016 shall be exempt from tax for
10 years.

• Income tax exemption is available to ICT investors under the
  following criteria:-
  • Business employs 50 employees or more for any 6 months
    within the income year; and
  • 60 percent of its total services is exported.

ii) The income of an ICT operator anywhere outside the Kalabu Tax
Free Zone who is granted a license between 1 January 2008 and
31 December 2010 shall be exempt from tax for 10 years.

• Any ICT operator may apply and pay a license fee of $1,000
  per annum to the Commissioner of Inland Revenue. The Tax
  exemption is granted from the date of the initial license.
• Income tax exemption is available to ICT investors under the
  following criteria:-
• Business employs 50 employees or more for any 6 months
  within the income year; and
• 60 % of its total services is exported.

iii) The income of any new operator who is granted a license from 1
January 2009 to be exempt from tax for a period of 13 years

• Any new operator may apply and pay a license fee of $1,000
  per annum to the Commissioner of Inland Revenue. The Tax
  exemption is granted from the date of the initial license;
• Income tax exemption is available to investors under the following
  criteria:-
  • Business employs 50 employees or more for any 6 months
    within the income year; and
  • 50 percent of its total services is exported.
• Duty free importation of computer, computer parts & accessories,
  plant, equipment & fittings, and specilised furniture for initial
  establishment to approved ICT/BOP Business operators from 1
  January 2009.

Additional Tax Incentives for ICT Industries

• Tax Exemption is available to new ICT operators and existing
  ICT businesses for a period commencing 1 January 2006 to 31
  December 2012;
• The exemption is available to ICT businesses employing more than
  50 employees and investing before 31 December;
• Additional incentives to attract setting up of ICT industries
  includes:
  • 80% income tax exemption for businesses employing 101 or
    more employees;
  • 60% income tax exemption for businesses employing from 60
    to 100 employees; and
  • 40% income tax exemption for businesses employing from 10
    to 59 employees.

MANUFACTURERS

Fiji, despite its smallness in size, has been successful in attracting a lot of investors from abroad. The industry possesses a lot of potential in developing niche markets, given the available resources, capacity and skills acquired over the years.  The Fiji Government in order to attract more foreign investors into this sector provides the following incentives.

Food Processing & Forestry

• 100% of the amount of investment as a deduction for investing
  in food processing as well as forestry. Re-investment will also be
  allowed for expansion purposes. In order to qualify, the investor
  should utilize 50% of local produce in its production process.

Renewable Energy Projects and Power Cogeneration

• 5 year tax holiday is available to a taxpayer undertaking a new
  activity in renewable energy projects and power cogeneration as
  approved by the Commissioner.
• Duty free importation of renewable energy goods is also
  available.
  

FIJI MY SECOND HOME PROGRAMME

• This Programme is open to citizens of other countries recognized
  by Fiji in the “Fiji My Second Home Programme” as administered
  by the Reserve Bank of Fiji;
• Interest income is exempt from tax under the following criteria:-
  • Age below 50 years old:
    • Minimum deposit of $300,000 and maintain the deposit
      in Fiji for a minimum of two years.
  • Age 50 years and above:
    • Minimum deposit of $200,000 and maintain the deposit
      in Fiji for a minimum of two years.
• To qualify the applicant must maintain a minimum balance of
  $100,000 from the third year onwards and throughout the entire
  stay in Fiji.

FOREIGN CURRENCY ACCOUNT SCHEME

• Interest income is exempt from tax which accrues to or in favor of
  a non-resident including former Fiji residents who hold funds in Fiji
  commercial bank accounts under the following criteria:-
  • For foreign currency accounts, interest income for deposit
    above the equivalent of FJD$300,000; and
  • For Fiji Dollar accounts, any amount of interest income.

OTHER INCENTIVES

• Employment Taxation Scheme – 150% of the salary and wages
  paid within 1 January 1997 and 31 December 2010 are tax
  deductible. The deduction is restricted to salary and wages paid
  in respect of 12-month period commencing from the date of the
  appointment of the employee provide he or she has not previously
  been in full-time paid employment;
• 150% deduction on capital expenditure (excluding motor vehicles,
  furniture and fittings) incurred in Fiji by a non-resident company
  carrying on business in Fiji from profits earned or derived in Fiji;
• Donation to the Fiji International Film Festival – 200% tax
  deduction is available for cash donations exceeding $30,000 made
  by a taxpayer between 1 January 2009 and 31 December 2010
  to the Fiji Audio Visual Committee towards the organization and
  sponsorship of the “Fiji International Film Festival”; and
• Miss South Pacific Pageant 2009 – 200% tax deduction is available
  for cash donations exceeding $50,000 made by a taxpayer in
  2009 to the Hibiscus Committee towards the organization and
  sponsorship of the “Miss South Pacific Pageant 2009”.

OTHER CUSTOMS CONCESSIONS

Industry	Items	Fiscal	VAT (%)
Sugar	Cab & chassis specifically for carting sugar cane.	5%	12.5
Fishing	1. Automotive Diesel Oil 2. Specialised fishing gear & equipment  3. Fish baits 4. Specialised fishing vessels	2cents /litre Free Free Free	12.5 12.5 12.5 12.5
Approved Operators Engaged in 100% Export	1. Sharks Fin 2. Live Fish 3. Live Corals 4. Food Supplementary 5. Fish sauce and Fish	Free Free Free Free Free	12.5 12.5 12.5 12.5 12.5
Bus Industry	1. New chassis fitted with engine for body building purposes & new engines for replacements of older engines 2. Identifiable fixtures and components 3. Fuel   4. Ticketing Machines and ticketing machine parts	Free 5% 18c/ltr rebate on ADO Free	12.5   12.5   12.5 12.5
Inter Island Shipping	1. Automotive Diesel Oil & Industrial Diesel Oil 2. Mooring ropes between 56mm to 76mm in diameter	5% Free	12.5 12.5
Logging	Cab & chassis specifically for carrying logs	5%	12.5
Ship building	1. Identifiable fixtures, fittings and components 2. Approved raw materials	Free Free	12.5
Prawn Industry	Prawn Larvae Prawn feed Pesticide Fungicide Lime Formalin	Free Free Free Free Free Free	12.5 12.5 12.5 12.5 12.5 12.5
Mining Industry	1. Capital, plant and equipment except hand tools of a kind of general-purpose item 2. Motors Vehicles and specilised mining mobile equipment (except parts and accessories)	Free   Free	12.5   12.5
Coachwork builders	1. New chassis fitted with engine for body building pourposes 2. identifiable fixtures and components	Free 5%	12.5 12.5

 

For further details on incentives, please download pdf on 2009 Incentives...