Fiji

Corporate - Significant developments

Last reviewed - 08 June 2021

Corporate income tax (CIT)

The following amendment to the Fiji Income Tax Act (FITA) 2015 comes into effect from 19 August 2021:

  • Any capital gains made by a person on the disposal of shares is exempt from Capital Gains Tax (CGT) if the shares were held by the person from before 1 May 2011 (that is, before the introduction of CGT in Fiji).

The following amendments to the Fiji Income Tax Act (FITA) 2015 and related Regulations come into effective from 1 August 2021:

  • The debt forgiveness provisions under the COVID-19 response budget have been extended to 31 December 2022 and applies to debt created up to 31 December 2021.
  • The export income deduction (EID) of 60% has been extended until 2024. Agriculture, fisheries or forestry sector will qualify for EID of 90% until 2024.
  • Amounts deposited in a Natural Disaster Reserve account with a financial institution prior to 1 July 2021 may be utilised to sustain a business activity of the company that is affected by the COVID-19 pandemic.
  • A new pandemic reserve account may be set up with a financial institution for the purpose of providing a reserve for sustaining a business activity of the company that is affected by a pandemic. A 150% tax deduction will be available for funds deposited in this account (subject to conditions). 
  • The re-organisation provisions have been extended to include resident partnerships.
  • A 200% tax deduction will be available to a landlord of commercial buildings for the aggregate sum of the difference between the rent payable on 31 July 2021 and the rent payable for the period commencing on and from 1 August 2021 and ending on 31 July 2022, subject to certain conditions. 
  • A 200% tax deduction is available for Fiji National Provident Fund (FNPF) employer additional contributions paid up to 10% of the total salary paid to the employee.
  • A 200% tax deduction will be available for expenses incurred for the development or upgrade of online shopping website with integrated payment platform.
  • A 200% tax deduction will be available for expenses incurred for any investment in fogging machine used for the purpose of sanitisation or decontamination.
  • A 300% tax deduction will be available for costs incurred from 1 August 2021 to 31 December 2023 for the installation, implementation and operation of Electronic Fiscal Device (EFD).
  • The 300% tax deduction for the amount of salary or wages paid to an employee who is required by the Ministry of Health and Medical Services to be quarantined is only available if the employee has tested positive for COVID-19 or is primary or secondary contact of a person who has tested positive.  The deduction has been extended to 31 December 2022.
  • Part 6 of the FITA relating to mining is effective from 1 August 2021.
  • All Unit Trusts will be exempt for income tax purposes.
  • The definition of a Short Life Investment under the provisions relating to hotel investment incentives has been extended to include renovation and refurbishment of an existing hotel with capital investment over FJD 2,000,000 where provisional approval is granted on or after 1 August 2021. If final approval is granted to a company that applies on or after 1 August 2021 for refurbishment and renovation, the income of the company is exempt from tax on profits derived from the operation of the hotel for a period of 5 consecutive fiscal years.
  • Any hotel or integrated tourism development owner who has been granted provisional approval for investment allowance under the hotel investment incentives on or after 1 January 2016 shall complete construction of the project within 24 months from the date of provisional approval.
  • The hotel investment allowance incentive has been increased to 50% (previously 25%).
  • A company granted provisional approval for Short Life Investment Package (SLIP) under the hotel investment incentives shall complete the construction of the short life investment within 24 months from the date of provisional approval.
  • A company that applies for final approval (and is granted final approval) for SLIP on or after 1 August 2021 will qualify for 20 years income tax exemption where the capital investment in the hotel is more than FJD 40,000,000.
  • Tax Free Region Incentives - extended to include investment in ICT Park; income tax exemption for up to 25 years depending on the level of capital investment in ICT Park and other conditions.
  • The Income Tax Subdivision of Land Incentives have been amended to replace the investment allowance previously available with income tax exemption on developer profits derived from the subdivision of land. 
  • New incentive packages have been introduced for the following:
    • Information Communications Technology (ICT) Infrastructure Investment Incentives - income tax exemption for up to 20 years depending on the level of capital investment and other conditions.
    • Submarine Network Cable Investment Incentives - subject to conditions, income tax exemption for 30 years where capital investment is more than FJD 40,000,000.
    • Recycling Business Investment Incentives - income tax exemption for up to 20 years depending on the level of capital investment and other conditions.
    • Commercial Agricultural Farming and Agro-processing Business Investment Incentives - income tax exemption for up to 20 years depending on the level of capital investment and other conditions.

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 Fijian dollars [FJD] made to an 'approved sports fund').
  • 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 CGT, 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 will be available. Furthermore, any interest income earned from corporate bonds will be exempt for income tax purposes.
  • The depreciation write-off incentive for assets of more than FJD 1,000 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.
    • 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 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)

The following amendments to the TAA and related Regulations are effective 1 August 2021:

  • A tax assessment (original tax assessment) may only be amended as follows:
    • in case of fraud, wilful neglect, or serious omission by or on behalf of the taxpayer - at any time.
    • in case of a company with a gross turnover of less than $1.25 million - within 3 years of the date the taxpayer filed the self assessment return or within 3 years of the date the CEO of the FRCS serves notice of the tax assessment on the taxpayer.
    • in any other case - within 6 years of the date the taxpayer filed the self assessment return or within 6 years of the date the CEO of the FRCS serves notice of the tax assessment on the taxpayer.
  • An amended tax assessment may be amended as follows:
    • in case of fraud, wilful neglect, or serious omission by or on behalf of the taxpayer - as the CEO of the FRCS deems fit.
    • in case of a company with a gross turnover of less than $1.25 million - within 3 years of serving the notice of the original or amended assessment.
    • in any other case - within 6 years of serving the notice of the original or amended assessment on the taxpayer.
  • If the FRCS is required to pay a refund of overpaid tax to a taxpayer under any tax law, the FRCS must first apply the amount of the refund against any tax or duty owing by the taxpayer under any tax, customs or excise law.
  • If a non-resident person derived a fee for the provision of a professional service and paid non-resident withholding tax to the FRCS on the same contrary to an international tax treaty to which Fiji is a party, the non-resident person may make a claim for a refund of the non-resident withholding tax in accordance with the Mutual Agreement Procedure under the respective international tax treaty.
  • A $500 penalty will be imposed on a taxpayer who presents or submits a dishonoured cheque.
  • Penalty for failure to pay tax by the due date is deemed to have been waived if the taxpayer makes payment arrangements with the FRCS within 3 months from 1 August 2021 and pays the tax before 30 June 2022.
  • Previously only the Tax Tribunal could, at any stage in a proceeding, refer a decision to the CEO of the FRCS for reconsideration.  This is now also extended to the Tax Court.
  • The implementation of Electronic Fiscal Device (EFD) has been further deferred until 31 December 2023. 

The FRCS has issued a Public Notice advising all taxpayers and tax agents, who are affected by COVID-19 movement
restrictions, lock down and containment zones that the time line for lodgement of tax returns that are due for lodgement during the months of April to 31 December 2021 is extended to be filed by 31December 2021 and the late lodgement penalties would be waived.

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)

The following amendments to the VAT Act are effective from 1 August 2021:

  • An insurance indemnity payment received pursuant to a contract of Parametric insurance is not deemed to be consideration received for a supply of services by a registered person in the course or furtherance of the registered person's taxable activity.
  • Parametric insurance is an exempt supply for VAT purposes.
  • Nothing shall prohibit the FRCS CEO from disclosing the VAT registration status of any person.
  • Crew allowance and unaccompanied luggage for a travelling passenger are not subject to importation VAT.
  • The definition of omnibus for VAT zero rating purposes was amended to align with the definition contained in the Land Transport Act 1998.

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 2021:

  • Subject to certain other conditions, provision is made to allow for the refund of ECAL levied or paid inadvertently or erroneously provided that the claim for the refund is made within one year from the date of the ECAL payment unless the refund is attributable to an error made by the FRCS. 
  • ECAL exemption on the importation of smart phones and electric lawn movers under concession codes 212 (private individual), 218 (passengers disembarking in Fiji), 218A (crew allowance for international commercial scheduled flight) and 219A (a bona fide passenger finally disembarking in Fiji) of the Customs Tariff Act 1986. 
  • ECAL exemption for the importation of the following items under concessions codes 212 (private individual), 218 (passengers disembarking in Fiji), 218A (crew allowance for international commercial scheduled flight) and 219A (a bona fide passenger finally disembarking in Fiji), 235 (existing hotels and resorts) and 235A:
    • Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated
    • Refrigerators and freezers
    • Televisions
    • Household and commercial laundry-type washing machines, including machines which both wash and dry
    • Household and commercial clothes-dryers
    • Dish washing machines
    • Electric stoves
    • Microwave ovens
    • Hair dryers
    • Toasters
    • Electric kettles

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.
    • Televisions.
    • Clothes washers and dryers.
    • Dish washers.
    • Electric stoves.
    • Microwave ovens.
    • Electric lawn mowers.
    • Hair dryers.
    • Toasters.
    • Electric kettles.

Stamp duties

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.