Fiji

Corporate income tax (CIT)

The following amendments to the Fiji Income Tax Act (FITA) 2015 and related Regulations entered into effect from 1 August 2023 unless stated otherwise:

• The CIT rate increased from 20% to 25%, effective from the 2023 tax year (i.e. financial years commencing on or after 1 August 2022).
• The CIT rate applicable to South Pacific Stock Exchange (SPSE) listed companies has been increased from 10% to 15%, effective from the 2023 tax year (i.e. financial years commencing on or after 1 July 2023). Furthermore, effective from the 2023 tax year, the tax rate of 25% (previously, 20%) will apply where the company has been listed on the SPSE for seven years or more.
• The capital gains tax (CGT) exemption on a gain made on the disposal of the first residential property was previously limited to sole ownership or co-ownership with one's spouse, including a spouse living in a de-facto relationship. Effective 1 July 2023, this has been extended to include ownership with siblings, parents, children, grandchildren, and grandparents.
• The CGT exemption on capital gain made on disposal of shares if the shares were held from before 1 May 2011 has been repealed effective 1 July 2023.
• Warehouse construction incentives have been repealed effective from 1 July 2023. Applications received before 1 July 2023 will still be processed.
• Effective 1 July 2023, the Information and Communication Technology (ICT) Incentive Regulations have been amended to change the definition of ICT business to services provided by businesses registered with the Business Process Outsourcing (BPO) Council of Fiji that provide specific services. The income tax exemption is based on capital investment and minimum employees.
• Income tax exemption is based on capital investment and minimum employees, as follows:

• 5-year exemption period for 100,000 to 250,000 Fijian dollars (FJD) capital investment and 25 minimum employees.
• 7-year exemption period for FJD 250,001 to FJD 500,000 capital investment and 50 minimum employees.
• 10-year exemption period for FJD 500,001 to FJD 1 million capital investment and 75 minimum employees.
• 13-year exemption period for greater than FJD 1 million capital investment and 100 minimum employees.

• The ICT start-up incentive (13-year tax exemption) is now redundant and no longer exists.
• Resident interest withholding tax (WHT) exemption on interest income less than FJD 1,000 has been removed effective 1 January 2024.
• 300% tax deduction for wages or salaries paid to first-time employees will be available only until 31 July 2023 (previously available till 31 December 2024).
• 100% tax deduction available to companies on the amount of tuition and living expenses paid for student(s) at a higher education institution has been removed.
• The income derived in connection with water extraction and bottling (or any part thereof) will be exempt from 1 August 2023 to 31 July 2030. No expenses will be allowed as a deduction or carried forward. No capital expenditure shall be depreciated, amortised, or carried forward.
• To discourage treaty shopping, section 10(8) of the Income Tax Act has been deleted.
• Short Life Investment Package (SLIP) under the Hotel Incentives Regulations is now only available to companies carrying out a short life investment project as its first business.
• Filing of Withholding Tax Certificate (TWC) requirement has been removed as a result of automation of the Fiji Revenue and Customs Service (FRCS) tax system, effective 1 January 2024.

The following amendments to the FITA 2015 and related Regulations entered into effect from 1 August 2022 unless stated otherwise:

• The CIT rate applicable to an approved global or regional headquarters has been increased from 17% to 20% effective from the 2023 tax year.
• The CIT rate of 10% applicable to a company listed on the SPSE will apply until the end of the company’s seventh tax year from the date of listing. From the 2023 tax year, the tax rate of 20% will apply where the company has been listed on the SPSE for seven or more years.
• The Electric Vehicle Charging Station Development Package has been further incentivised as follows:
  • The minimum capital investment threshold has been reduced from FJD 100,000 to FJD 50,000.
  • The subsidy has been increased from 5% to 10% of the total capital expenditure incurred in the development of electric vehicle charging stations.
  • A taxpayer may apply to claim 100% write-off in the year of expenditure in respect of capital expenditure incurred for the purchase of an electric vehicle used for the taxpayer’s business.
• A 100% tax deduction is available to companies for the amount of tuition and living expenses paid for a student’s education at a higher education institution. Conditions apply.
• With effect from 1 January 2023, the CGT exemption on any capital gain on the disposal of shares held from prior to 1 May 2011 will be limited to resident persons and Fiji citizens only.
• Any gain made on the disposal of securities under a repo transaction (i.e. a repurchase agreement or a sale and purchase agreement carried out between a financial institution and the Reserve Bank of Fiji under the Master Repo Agreement [i.e. a repurchase agreement between the Reserve Bank of Fiji and financial institutions] authorised by the Reserve Bank of Fiji) is exempt from CGT. However, if a financial institution defaults under the Master Repo Agreement, the exemption granted on the disposal of securities ceases to apply and any tax payable at the date of transfer of the security becomes immediately payable.  This does not apply where the security is provided in the form of shares and bonds listed on the SPSE.
• Provisions were introduced allowing any hotel or integrated tourism development owner to seek further extension to complete the construction of a new hotel or the extension, refurbishment, and renovation of an existing hotel or integrated tourism development.
• A hotel or resort carrying on business in Fiji is allowed a deduction for 300% (previously 150%) of the amount of any salary or wages paid for the employment of a local artist.
• The Residential Housing and Development Incentive Package has been further incentivised by introducing the New Residential Housing and Development Incentive Package for minimum capital investment of FJD 5 million with at least ten residential housing units and where the project commences on or after 1 August 2022 and the building is completed within 24 months from the date of provisional approval, as follows:
  • A 50% developer profit exemption.
  • Customs concession (zero duty) on the importation of capital goods within the period specified above provided that the company must first provide proof that such goods cannot be produced locally to the satisfaction of the Minister.
• The following employment incentives, which expire on 31 December 2023, have been extended to 31 December 2024:
  • 300% tax deduction for the amount of any salaries or wages paid for first time employees.
  • 300% tax deduction for the amount of any salary or wages paid to a student for employment of the student before the student’s graduation where the employment forms part of the student’s course requirements of a higher education institution.
  • 300% tax deduction for the amount of any salary or wages paid to a student for employment of the student in an area related to the student’s area of study for a period not exceeding 3 months in a 12-month period.
  • 400% tax deduction for the amount of any salary or wages paid to a person with a disability for a consecutive period of 3 years.
• There is a new employment incentive of 300% tax deduction for the amount of any salary or wages paid to a student for employment of the student under an apprenticeship before the student’s graduation where the apprenticeship forms part of the student’s course requirements of a higher education institution. The deduction may only be claimed between 1 August 2022 and 31 December 2024.

The following amendments to the FITA 2015 and related Regulations entered into effective from 1 April 2022:

• The debt forgiveness provisions under the COVID-19 response budget have been extended to 31 December 2023 and the provisions apply to debts created up to 31 December 2022.
• In the last budget, the Short Life Investment Package (SLIP) was extended to renovations and refurbishments of existing hotels or resorts. The five-year tax holiday for investments of more than FJD 2 million will be extended for an additional 12 months until 31 December 2023. 
• The definition of 'cost' under the FITA has been amended to allow an exemption to any state-controlled entity that is in the business of generating, distributing, and retailing electricity from costs related to any grant, subsidy, rebate, commission, or other assistance received or receivable by the person in respect of the acquisition of the asset.
• The Income Tax (Withholding Tax) Regulations 2013 have been amended to issuance of annual tax withholding certificates through electronic means.
• 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 and has been extended from 31 December 2022 to 31 December 2023.
• A 200% tax deduction is allowed for any salary and wages paid to an employee when the employee is on maternity leave.
• A 13-year tax holiday has been given to the company that owns and operates the Fijian Drua team.
• Interest derived by a resident person from a resident company or permanent establishment (PE) in Fiji of a non-resident company that does not exceed FJD 1,000 per annum is exempt income.
• Environment and climate adaptation levy (ECAL) of 5% has been removed and the social responsibility tax (SRT) rate has increased by the same percentage (i.e. 5%) for the computation of personal income tax (PIT). The tax burden remains the same.
• The Income Tax Subdivision of Land Incentives have been extended from 31 July 2022 to 31 July 2024.
• The Income Tax (Film-making and Audio-visual Incentives) Regulations 2016 has been amended to make the following changes:

• The film tax rebate has been decreased from 75% to 20%.
• The maximum rebate payable per approved final certificate will not be more than FJD 4 million (previously FJD 15 million).
• The 200% tax deduction available to landlords of commercial buildings for the amount of reduction of rent has been extended from 31 July 2022 to 31 July 2023.
• A 200% tax deduction is allowed for sponsorships of not less than FJD 250,000 made to the company that owns and operates the Fijian Drua team.

Tax Administration Act (TAA)

The following amendments to the TAA and related Regulations are effective from 1 August 2023:

• A new provision introduced to allow anyone dissatisfied with an objection decision to seek resolution through an alternative dispute resolution process (e.g. arbitration or mediation) without going to litigation.
• Amendments made to allow FRCS to place arrival alerts at the border for persons who have outstanding tax obligations or have not made arrangements to settle their tax obligations.

The following amendments to the TAA and related Regulations are effective from 1 August 2022:

• An application for a refund made by a resident who has paid non-resident WHT in relation to professional services to the FRCS in respect of the provision of the professional service contrary to an international tax treaty to which Fiji is a party is not admissible if the person making the claim makes the claim after 31 December 2022.
• In addition to issuing a default assessment where a taxpayer has not lodged a return, the FRCS can now also issue a default assessment where the FRCS is not satisfied with the return lodged by the taxpayer.
• The TAA has been amended to allow the Tax Agents Board to refer complaints to FRCS for investigation of complaints made against Tax Agents.
• With effect from 1 January 2023, if a refund remains uncollected for a period of five or more years from the date the refund becomes due, the FRCS may forfeit the amount payable.
• The application fees payable to the FRCS for binding rulings has been increased to the following:
  • Easily determinable: FJD 300.
  • Requires a moderate degree of analysis: FJD 1,500.
  • Requires highly technical and complex analysis: FJD 3,000.

The following amendments to the TAA and related Regulations are effective from 1 April 2022:

• The requirement for an FRCS board member to co-sign a Departure Prohibition Order has been deleted.

Value-added tax (VAT)

The following amendments to the VAT Act are effective from 1 August 2023:

• The VAT rate increased from 9% to 15% on all goods and services, except on zero-rated items and exempt supplies.
• Zero-rated items now also includes 'supply of any prescription medicine or prescription drugs'.
• The planned further implementation of the VAT Monitoring System (VMS) has been paused until the entire system is reviewed.

The following amendments to the VAT Act are effective from 1 August 2022:

• Import VAT is not applicable on the importation of specified electric vehicles.
• VAT reverse charge is now applicable to all taxpayers.
• An exempt supply includes the supply by a registered person of goods and services used wholly by the registered person for the purposes of making exempt supplies, including goods and services that can only be used for making exempt supplies for which no deduction for input tax was claimed on the acquisition, production, maintenance, and upgrading of those goods and services. Notwithstanding this, the supply by a registered person of goods used wholly by the registered person, including goods that can only be used for making supplies under paragraph 2 of the First Schedule of the VAT Act (i.e. the supply of accommodation in a residential dwelling by way of hire, provided it is used predominantly as a place or residence abode), qualifies as an exempt supply regardless of whether deduction for input tax was claimed on the acquisition, production, maintenance, and upgrading of the goods.

The following amendments to the VAT Act are effective from 1 April 2022:

• Certain goods ('basic food items') are zero-rated for VAT purposes. 
• VAT was increased to 15% on certain prescribed goods and services.

Environment and climate adaptation levy (ECAL)

The following amendments to the ECAL Act are effective from 1 April 2022:

• The 5% ECAL previously applicable on prescribed services, white goods and passenger motor vehicles, superyacht charter, plastics, and personal income has been removed.
• The 50 cents ECAL on plastic bags has been renamed as plastic bag levy.
• The 5% ECAL on superyacht charters has been renamed as superyacht charter fee.