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 Corporate income tax (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 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 his or her 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• The CGT exemption on capital gain made on disposal of shares if the shares were held from before 1 May 2011 has been repealed effective 1 July 2023.
• Warehouse Construction Incentives has been repealed effective from 1 July 2023. Applications received before 1 July 2023 will still be processed.
• Effective 1 July 2023, the ICT Incentive Regulations have been amended to change the definition of ICT business. New definition - services provided by businesses registered with the BPO Council of Fiji that provide specific services. The income tax exemption is based on capital investment and minimum employees.
• ICT start-up incentive (13-year tax exemption) is now redundant and no longer exists.
• Income tax exemption is based on capital investment and minimum employees, as follows:

• 5-year exemption period for $100,000 to $250,000 capital investment and 25 minimum employees
• 7-year exemption period for $250,001 to $500,000 capital investment and 50 minimum employees
• 10-year exemption period for $500,001 to $1,000,000 capital investment and 75 minimum employees

• 13-year exemption period for greater than $1,000,000 capital investment and 100 minimum employees

• Resident Interest Withholding Tax (RIWT) exemption on interest income less than $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.
• Water Extraction Industry Incentives - 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 or 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 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 100,000 to 50,000 Fijian dollars (FJD).
  • 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.

The following amendment to the FITA 2015 entered into effect from 19 August 2021:

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

The following amendments to the FITA 2015 and related Regulations entered into effective from 1 August 2021:

• The debt forgiveness provisions under the COVID-19 response budget have been extended to 31 December 2022 and apply to debt created up to 31 December 2021.
• The export income deduction (EID) of 60% has been extended until 2024. The agriculture, fisheries, and forestry sectors 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 an online shopping website with integrated payment platform.
• A 200% tax deduction will be available for expenses incurred for any investment in a 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 an 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 a 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 million 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 five 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 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 million.
• Tax Free Region (TFR) incentives are extended to include investment in an Information and Communications Technology (ICT) Park, which includes income tax exemption for up to 25 years, depending on the level of capital investment in an 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:
• 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: Income tax exemption for 30 years where capital investment is more than FJD 40 million, subject to conditions.
• 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.

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 withholding tax (WHT) in relation to professional services to the Fiji Revenue and Customs Service (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.

The following amendments to the TAA and related Regulations are effective from 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 FJD 1.25 million: Within three years of the date the taxpayer filed the self-assessment return or within three years of the date the CEO of the FRCS serves notice of the tax assessment on the taxpayer.
  • In any other case: Within six years of the date the taxpayer filed the self-assessment return or within six 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 FJD 1.25 million: Within three years of serving the notice of the original or amended assessment on the taxpayer.
  • In any other case: Within six 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 WHT 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 WHT in accordance with the Mutual Agreement Procedure (MAP) under the respective international tax treaty.
• An FJD 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 three 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 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 downs, and containment zones that the timeline for lodgement of tax returns that are due for lodgement during the months of 1 April 2021 to 31 December 2021 is extended to be filed by 31 December 2021, and the late lodgement penalties will be waived.

Value-added tax (VAT)

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

• 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.

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 (e.g. hand sanitisers, anti-bacterial hand wash) will be exempt from import VAT.

The implementation of the VAT Monitoring System (VMS) as captured in the EFD Regulations will be deferred to 1 January 2022. The VMS will be applicable on gross turnover of more than FJD 100,000.

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.

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 mowers 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), 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 that both wash and dry.
  • Household and commercial clothes-dryers.
  • Dish washing machines.
  • Electric stoves.
  • Microwave ovens.
  • Hair dryers.
  • Toasters.
  • Electric kettles.