Corporate income tax (CIT)
The following amendments to the Fiji Income Tax Act (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 3 payments at a rate of 331/3 % to 9 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 which 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.
- Hotel short life investment package incentive has been revised to include construction of new hotel with capital investment of FJ $250,000 or more (previously FJ $7,000,000) subject to certain conditions.
- Hotel standard allowance incentive has been revised to include existing hotels (previously only applicable to new hotels).
The following amendments to the Fiji Income Tax Act (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 1,000 Fijian dollars (FJD).
- 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 2021. The VMS will be applicable on gross turnover of more than FJ $100,000.
Taxpayers who voluntarily register for VAT (that is, those presently below FJ $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 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 April 2020 and for the period commencing on and from 1 April 2020 to 31 December 2020, stamp duty exemption applies on:
(a) 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
(b) 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.