Fiji

Income tax

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

• Effective from 1 January 2024, social responsibility tax (SRT) has been removed and incorporated into Pay-As-You-Earn (PAYE) tax.
• The capital gains tax (CGT) exemption on a gain made on the disposal of the first residential property was limited to sole ownership or co-ownership with his or her spouse including a spouse living in a de-facto relationship. This has been extended to include ownership with siblings, parents, children, grandchildren and grandparents, effective from 1 July 2023.
• The CGT exemption on capital gain made on disposal of shares if the shares were held from before 1 May 2011 has been repealed effective 1 July 2023.
• Resident interest withholding tax (WHT) exemption on interest income less than 1,000 Fijian dollars (FJD) 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).
• To discourage treaty shopping, section 10(8) of the Income Tax Act has been deleted.
• 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:

• 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.
• Provisions 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 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 three 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 three 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 effect from 1 April 2022 and apply to individuals conducting a business (including partnerships):

• The debt forgiveness provisions under the COVID-19 response budget have been extended to 31 December 2023 and apply to debt created up to 31 December 2022.
• 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.
• 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 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 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 the 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 the 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.

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 zero-rated 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 'basic foods items' are zero-rated for VAT purposes. 
• Certain prescribed goods and services are subject to VAT at the rate of 15%. 

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.