Fiji Corporate Tax Guide

Fiji

Suva GMT +12

EY +679 331-4166

Mail address: Fax: +679 330-0612 G.P.O. Box 1359 Suva Fiji Street address: Pacific House Level 7

1 Butt Street Suva Fiji

Business Tax Advisory

Steven Pickering

A. At a glance

330-8241

steve.pickering@fj.ey.com

Corporate Income Tax Rate (%) 20

Capital Gains Tax Rate (%)

Branch Tax Rate (%)

Withholding Tax (%)

Dividends

Royalties from Patents, Know-how, etc.

Net Operating Losses (Years) Carryback

Carryforward

(a)

(b)

(a) Effective from 1 August 2017, all dividends distributed are exempt from income tax.

See Section C.

B. Taxes on corporate income and gains

Corporate income tax. Resident companies are subject to income tax on worldwide assessable income. Nonresident companies carrying on business through a branch pay tax only on Fiji-source income. A resident company is a company incorporated in Fiji. A company not incorporated in Fiji is considered a resident company if it carries on business in Fiji and has either its central management or control in Fiji or its voting power controlled by shareholders who are residents of Fiji.

Tax rates. In general, resident companies and branches of non resident companies are subject to tax at a rate of 20%. Companies that are listed on the South Pacific Stock Exchange and have a resident shareholding of at least 40% are subject to tax at a rate of 10%. Foreign companies that establish their headquarters in Fiji or relocate their headquarters to Fiji are subject to tax at a rate of 17%.

Tax holidays are available to various enterprises and for various activities, including qualifying hotel projects, companies granted

a tax-free regions license, qualifying information communica tions technology operators, approved activities in commercial agricultural farming and agro-processing, approved activities with respect to processing agricultural commodities into biofu els, approved activities in renewable energy projects and power cogeneration, medical services, residential housing development and audiovisual activities.

Capital gains. The rate of the capital gains tax (CGT) is 10%. Effective from 1 January 2016, the CGT is administered through the Income Tax Act 2015. Before that date, CGT was adminis tered through the Capital Gains Tax Decree 2011. Before 1 August 2020, CGT applied only to non-depreciable capital assets, while gains on depreciable capital assets were subject to income tax at a rate of 20%.

Administration. The Fiji tax year is the calendar year. However, for most companies, an alternative fiscal year is normally allowed. Tax for any fiscal year is payable in three installments according to the following schedule:

• 33.3% of the preceding year’s tax liability by the end of the sixth month

• Another 33.3% of the preceding year’s liability by the end of the ninth month

• Another 33.4% of the preceding year’s liability on or before the balance date

Companies are required to file tax returns within three months after the fiscal year-end, but extensions of an additional two, four or six months are granted to tax agents, depending on the level of taxable income.

Dividends. Effective from 1 August 2017, all dividends distributed are exempt from income tax.

Foreign tax relief. Income derived by Fiji residents from treaty countries is subject to Fiji income tax, but credit is given for taxes paid, up to the amount of Fiji tax applicable on the same income. Income derived from non-treaty countries is exempt to the extent that it was subject to income tax in such countries.

C. Determination of trading income

General. Income is defined as the aggregate of all sources of in come, including annual net profit from a trade, commercial, finan cial or other business.

Expenses are deductible to the extent incurred in producing taxable income. Expenditures of a personal or capital nature are generally not deductible. Deductions are allowable for certain expenditures incurred in the agricultural and mining industries. Experimentation and research and development expenses incurred in projects connected with the taxpayer’s business are deductible.

Inventories. Fiji does not have any specific measures for stock valuation for the purposes of year-end income determination. Valuations are generally made at cost or market value on a first-in, first-out (FIFO) or actual basis. The tax authorities have discretion to make adjustments if inventories are sold or other wise disposed of at below market value.

Provisions. Provisions are not deductible until payments are made or, in the case of doubtful trading debts, until the debts are considered totally irrecoverable and have been written off.

Tax depreciation. The following are some of the annual deprecia tion rates prescribed by law for 2016 and future years.

Rate Straight Diminishing Asset line (%) value (%)

Commercial and industrial buildings 1.25 to 7

Office equipment 12.5 20

Heavy commercial motor vehicles 25 40

Passenger motor vehicles 20 30 Plant and machinery 12.5 20

Tax depreciation is subject to recapture on the sale of an asset, to the extent the sales proceeds exceed the tax value after deprecia tion. The amount recaptured may be set off against the cost of a replacement asset; otherwise, it is taxed as ordinary income in the year of sale. In addition, a capital gain on the sale of a capital asset is subject to CGT.

Relief for losses. Tax losses incurred in 2019 and future years may be carried forward for eight years.

Prior to 2019, tax losses may be carried forward for four years. Losses incurred as a result of claiming the standard allowance are available for carryforward for a period of eight years. The standard allowance is one of the hotel incentives. It allows a hotel owner a 25% deduction with respect to capital expenditure on construction, renovation or refurbishment of a hotel.

Losses are not available for carryforward if the taxpayer’s business in the year in which relief is claimed is substantially differ ent from its business in the year in which the loss was incurred.

Groups of companies. No group relief measures exist.

D. Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)

Value-added tax; imposed on virtually all goods and services and residential rent, if annual gross turnover exceeds FJD100,000; financial services (except insurance services) and gambling are exempt (the 15% rate is effective from 1 April 2022) 9/15

Environmental levy; imposed on prescribed services subject to the service turnover tax (the 0% rate is effective from 1 April 2022; the prior rate was 6%) 0

Fringe benefit tax 20

Social security contributions to the national provident fund, paid by Employer 5 Employee (maximum rate) 6

E. Miscellaneous matters

Foreign-exchange controls. Most remittances abroad require approval from the Reserve Bank of Fiji. Depending on the level of the country’s foreign-exchange reserve, further restrictions may be imposed on the nature, timing and amount of remittances that can be made.

Debt-to-equity ratios. An entity may have offshore borrowings up to FJD5 million per year without the prior approval of the Reserve Bank of Fiji. Foreign-owned companies may borrow locally any amount if a total debt-to-equity ratio of 3:1 is maintained. The total debt consists of local and offshore borrowings. Equity in cludes paid-up capital, shareholders’ non-interest-bearing loans, retained earnings and subordinated interest-bearing loans.

Anti-avoidance legislation. Contracts, agreements or arrange ments entered into that have the effect of altering the incidence of any tax may be rendered void by the tax authorities. Effective from 1 August 2020, the Income Tax Act allows for a restructuring provided that the parties are associates directly or through an interposed person.

F. Treaty withholding tax rates

Dividends* Interest Royalties % % %

Australia 0 10 15 India 0 10 10 Japan 0 10 15 Korea (South) 0 10 10 Malaysia 0 15 15 New Zealand 0 10 15 Papua New Guinea 0 10 15 Singapore 0 10 10

United Arab Emirates 0 0 10 United Kingdom 0 10 15 Non-treaty jurisdictions 0 10 15

* Effective from 1 August 2017, all dividends distributed are exempt from income tax.