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Fiji Publishes Implementing Acts for National Budget Amendments 2022-2023 — Orbitax Tax News & Alerts

The Fiji Revenue and Customs Service (FRCS) has published the implementing acts for the National Budget Amendments 2022-2023. The different acts are in line with the original drafts for the implementation of the budget measures and are generally in force from 1 August 2022. Some of the main direct tax and tax administration measures of the budget are summarized as follows:

  • The concessionary corporate tax rate of 17% provided for the relocation of global or regional headquarters to Fiji is repealed, with a transitional provision providing that any concessionary rate previously applied to a company continues to apply until the end of the company's tax year 2022 (standard 20% applies from tax year 2023);
  • The 10% reduced rate of corporate tax available to companies listed on the South Pacific Stock Exchange (SPSE) is limited to 7 years from tax year 2023, with companies that have enjoyed the reduced rate for 7 years or more subject to corporate tax at the rate of 20%;
  • The Electric Vehicle Charging Station Development Package is further incentivized as follows:
    • the minimum investment threshold will be reduced from FJD 100,000 to FJD 50,000;
    • the subsidy will be increased from 5% to 10% on capital expenditure incurred in the development of electric vehicle charging stations; and
    • the 7-year tax holiday will be maintained;
  • A 100% tax deduction is made available to companies for the amount of tuition and living expenses paid for student(s) at a higher education institution specified in the Higher Education Act 2008, with the deduction for living expenses limited to FJD 7,000 per calendar year;
  • As announced in the 2021-2022 National Budget, the FRCS will continue to facilitate the refund of non-resident withholding tax for professional fees, with refund applications due by 31 December 2022;
  • The capital gains tax exemption on gains made by a person on the disposal of shares will be limited to resident persons and Fiji citizens only with effect from 1 January 2023;
  • A capital gains tax exemption is provided on repurchase agreements (repo transactions) administered by the Reserve Bank of Fiji;
  • The 150% tax deduction available to hotels and resorts that hire local artists such as craftsmen, dancers, and musicians is increased to 300%;
  • The current Employment Taxation Scheme is extended until 31 December 2024, which provides:
    • a 300% tax deduction for the amount of any salary or wages paid for first-time employees;
    • a 300% tax deduction for the amount of any salary or wages paid to a student for employment before the student's graduation that forms part of the student's course requirements of a higher education institution;
    • a 300% tax deduction for the amount of any salary or wages paid to a student for employment in an area related to the student's area of study for a period not exceeding 3 months in a 12-month period;
    • a 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; and
    • a new 300% tax deduction for the amount of any salary or wages paid to persons employed for apprenticeships;
  • The Residential Housing and Development Incentive Package is further incentivized as follows:
    • a 50% developer profit exemption will be available for projects with a minimum investment level of FJD 5 million and at least 10 residential units;
    • a customs concession (zero duty) on the importation of capital equipment, plant, and machinery; and
    • no conditions on the sale price;
  • Tax Administration Act (TAA) measures include:
    • the provisions of default assessment under Section 9 of the TAA is extended to allow the Chief Executive Officer of FRCS to raise an assessment on reasonable grounds of tax evasion or probable revenue risk;
    • the TAA is amended to allow the Tax Agents Board to refer complaints to FRCS for investigation of complaints made against Tax Agents;
    • unclaimed tax refunds with FRCS for more than 5 years will be forfeited, which will only be applied once FRCS has utilized all mediums available to locate the taxpayer and release the refund; and
    • the fees for binding rulings issued by FRCS are increased as follows depending on the nature of the ruling:
      • Easily Determinable - increased from FJD 100 to FJD 300;
      • Moderate Degree of Analysis - increased from FJD 500 to FJD 1,500; and
      • Highly Technical and Complex - increased from FJD 1,000 to FJD 3,000.

The budget also includes several measures regarding indirect tax, including the reinstatement of VAT reverse charge and various customs changes.