Corporate income tax (CIT)
The following amendments to the Fiji Income Tax Act (FITA) 2015 become effective from 1 August 2020:
- The debt forgiveness provisions under the COVID-19 response budget have been extended to 31 December 2021.
Companies will be allowed to claim Fringe Benefit Tax paid as a deductible expense.
- 100% of the employer's Fiji National Provident Fund (FNPF) contribution paid by the employer will be an allowable tax deduction (including amounts paid in excess of the statutory amounts).
- Effective 1 April 2020, a 150% tax deduction is available for employer additional contributions paid up to 10% of the total salary paid to the employee.
- A 150% tax deduction will be available for hotels and resorts for amounts paid for any salaries or wages paid for employment of local artists.
- A 100% tax deduction will be available for cash donation made to a sporting entity recognised by the Fiji National Sports Commission (previously only available for cash donations up to $15,000 made to an "approved sports funds").
- Depreciable assets will now be taxed under capital gains tax (CGT) rules and not income tax rules subject to certain conditions.
For thin capitalisation purposes, the debt-to-equity ratio has been increased to 3:1. Consequently, a higher amount of tax deductibility in relation to interest expense will be allowed for a foreign-controlled Fiji company.
- Transfer of assets by a resident individual shareholder to a resident company will not be subject to capital gains tax (subject to certain conditions).
- The rules for advance tax payments as amended in the COVID-19 response budget (i.e. 9 payments at a rate of 111/9 %) will be made permanent, and the penalty provision on shortfall in estimated advance tax has been suspended for three years.
- The tax deduction to be accorded to landlords for reduction of commercial rent under the COVID-19 response budget will be extended until 31 December 2021.
- A 150% deduction of prescribed costs for listing a corporate bond on the South Pacific Stock Exchange. Furthermore, any interest income earned from corporate bonds are exempt for income tax purposes.
- The depreciation write-off incentive for assets of more than 1,000 Fijian dollars (FJD) but less than or equal to FJD 10,000 under the COVID-19 response budget will be made permanent.
- The 100% write-off incentive for the construction of a new commercial and industrial building under the COVID-19 response budget will be made permanent.
- Effective 20 August 2020, a 150% tax deduction will be available for any cash donation made to a fund established by the Fiji government for the 50th independence day celebrations.
- New incentive packages have been introduced for the following:
- Investment by private companies in buildings to be used by the Government or an entity approved by the Government; and
- Subdivision of land for residential or commercial purposes.
- The Medical Investment Package has been amended as follows:
- Amended the tax holiday periods and capital investment thresholds for Ancillary Medical Services and Private Hospitals.
- Amended the Investment allowance tax deduction and capital investment thresholds for Ancillary Medical Services and Private Hospitals.
- The Residential Housing Development Incentive Package has been amended to include duty concessions on the importation of raw materials, machinery and equipment for the establishment of the housing project.
The following amendments to the FITA 2015 and its Regulations are in response to the COVID-19 pandemic and are effective from 1 April 2020 unless indicated otherwise:
- Debt forgiveness of any outstanding debt will not be subject to income tax, subject to certain conditions. This will be applicable from 1 April 2020 to 31 December 2020.
- Thin capitalisation rules will be suspended for borrowings undertaken from 1 April 2020 up to 31 December 2020.
- A tax deduction will be accorded to landlords for reduction of commercial rent, subject to certain conditions. The reduction refers to the rent payable after 1 April 2020 to 31 December 2020.
- The export income deduction (EID) has been increased from 50% to 60% for the tax years 2020 to 2022.
- The rule for advance payment of tax for companies will be relaxed from the current three payments at a rate of 331/3 % to nine payments at a rate of 111/9 %, and penalties on estimated tax will also be removed. The policy will be valid until 31 December 2020.
- Assets of more than FJD 1,000 but less than or equal to FJD 10,000 may be fully depreciated in the year of acquisition provided the asset is acquired in the period commencing on and from 1 April 2020 to 31 December 2020.
- Buildings that are used for commercial or industrial purposes, including multi-storey and multi-unit residential buildings, may also qualify for a 100% write-off, subject to certain conditions.
- The certificate of exemption will be reintroduced for the 5% Contractors’ Provisional Tax.
- Salary and wages paid to first-time employees (including apprentices and trainees) for the first 12 months of employment qualify for a 300% deduction (instead of 200%), subject to certain conditions. This deduction is available until 31 December 2023.
- Salary and wages paid to students employed on a part-time basis qualify for a 300% deduction (instead of 200%), subject to certain conditions. This deduction is available until 31 December 2023.
- Salary and wages paid to disabled persons qualify for a 400% deduction (instead of 300%), subject to certain conditions. This deduction is available until 31 December 2023.
- A person is allowed a deduction for 300% of the amount of salary or wages paid between 1 April 2020 to 31 December 2020 to an employee affected by COVID-19 and who is required by the Ministry of Health and Medical Services to be quarantined.
- A 300% tax deduction will be available for cash donation made to the COVID-19 Fund.
- Processing of new provisional applications for Film Tax Rebate, as well as pending payments, will be suspended until further notice.
- The hotel short life investment package incentive has been revised to include construction of new hotel with capital investment of FJD 250,000 or more (previously FJD 7 million), subject to certain conditions.
- The hotel standard allowance incentive has been revised to include existing hotels (previously only applicable to new hotels).
The following amendments to the FITA 2015 and its Regulations are effective from 1 August 2019 unless indicated otherwise:
- Tax losses incurred on or after 1 January 2019 can be carried forward for eight years.
- The withholding tax (WHT) summary should be lodged monthly instead of annually.
- The export income deduction (EID) of 50% has been retrospectively reinstated from 1 January 2018 and has been extended until 2020.
- The following conditions to qualify for CIT exemption in information and communication technology (ICT) businesses have been repealed:
- Should employ at least 50 employees.
- At least 60% of services is exported.
- Payment of an annual licence fee of FJD 1,000.
- The minimum capital expenditure to qualify for the modernisation of buildings incentive has been reduced to FJD 250,000.
- Assets of FJD 1,000 or less may be fully depreciated in the year of acquisition, subject to certain conditions.
- The Tax Free Region shall include Naboro.
- The Residential Housing Development Package has been amended as follows:
- The sale price of at least 15% of the residential units of each storey for the first five storeys should be below FJD 300,000.
- The subsidy shall instead be a rebate of 7%, 5%, or 3% of the total capital expenditure incurred, depending on the sale price of the units.
- CIT exemption on income derived from a public private partnership investment for the term of the partnership, subject to certain conditions.
- The film making and audio-visual incentives have been amended as follows:
- The tax rebate shall be 75% of the total Fiji expenditure on the film but not exceeding FJD 15 million.
- 200% tax deduction on expenses incurred for the importation of filming equipment for film making and audio-visual production by a Fiji company.
- Introduction of the Post Production Facility Investment Package.
- Introduction of the Warehouse Construction and Retirement Village Incentives and Manufacture of Pharmaceutical Products Investment Package.
The following changes are effective from 1 January 2020:
- 100% of the employer's statutory Fiji National Provident Fund (FNPF) contribution paid by the employer reinstated as an allowable tax deduction.
- The cash donations exceeding FJD 15,000 (previously FJD 50,000) to a Sports Fund for purposes of sports development in Fiji shall qualify for a deduction of 150%.
Tax Administration Act (TAA)
Effective from 1 April 2020, penalties for failure to file a tax return or other document by the due date will be waived if that due date falls between 31 March 2020 to 31 December 2020 as long as they are lodged by 31 December 2020.
The following amendments to the TAA are effective 1 August 2019:
- A claim for tax refund is not admissible if the taxpayer has failed to lodge a tax return or any document required by law and does not make a claim within three years after year-end unless the refund is attributable to an error by the tax authority.
- The late lodgement penalty would also apply if any documents required by the tax laws (other than a tax return) are not lodged.
- Tax returns and required documents may be lodged by electronic means.
- Notices may be served by electronic means.
- Lodgement may be made electronically by the due date even if the due date falls on a non-working day.
Value-added tax (VAT)
Effective 1 April 2020, the importation of medical supplies, such as hand sanitisers, anti-bacterial hand wash, etc, will be exempt from import VAT.
The implementation of the VAT Monitoring System (VMS) as captured in the Electronic Fiscal Device (EFD) Regulations will be deferred to 1 January 2022. The VMS will be applicable on gross turnover of more than FJD 100,000.
Taxpayers who voluntarily register for VAT (that is, those presently below FJD 100,000) will not be captured in VMS.
The importation of the following shall not be subject to VAT effective 1 August 2019:
- Hybrid and electric charging vessels.
- Ships for coasting-trade.
Environment and climate adaptation levy (ECAL)
The following amendments to the ECAL Act are effective from 1 August 2020:
- ECAL has been reduced from 10% to 5% on prescribed services, income, super yacht charter fees, imported white goods, and imported vehicles.
- The threshold for application of ECAL has been increased from FJD 1.25 million to FJD 3 million.
- ECAL refund is allowed for persons who import goods for the purposes of re-export based on specific conditions.
The following amendments to the ECAL Act are effective from 7 July 2019 unless indicated otherwise:
- ECAL on plastic bags will increase from FJD 0.20 to FJD 0.50 effective from 1 January 2020.
- ECAL shall be applicable on the importation of the following goods:
- Hybrid vehicles.
- Smart phones.
- Air conditioners.
- Refrigerator and freezers.
- Clothes washers and dryers.
- Dish washers.
- Electric stoves.
- Microwave ovens.
- Electric lawn mowers.
- Hair dryers.
- Electric kettles.
Effective from 1 August 2020, the Stamp Duty Act has been repealed; however, any document that is executed or takes effect before 1 August 2020 remains subject to stamp duty.
Effective from 1 April 2020 and for the period commencing on and from 1 April 2020 to 31 December 2020, stamp duty exemption applies on:
- any mortgage, except the transfer or assignment of a mortgage and, for the avoidance of doubt, where stamp duty payable on any other instrument is as per the like duty for a mortgage, the exemption in this sub paragraph does not apply to such instrument, and
- any air waybill for any goods, merchandise, or effects to be exported from Fiji.
Offshore loans shall be exempt from stamp duty provided the funds are deposited into a bank account in Fiji.