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2014 FIJI TAX AND CUSTOMS
INCENTIVES
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CONTENTS
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2001-2014 Investment Package 3
Hotel Industry Incent ives 4
Audio Visual Incent ives 5-6
Agr iculture Incent ives 7
Smal l and Micro Enterpr ises 7
Tax Free Region Incent ives 8
ICT Incent ives 8
Manufacturers 9
Other Incent ives 9
Other Customs Concess ions 10
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YEAR RESIDENT COMPANIES
NON-RESIDENT COMPANIES
2001 From 35% to 34% From 45% to 34%2002 From 34% to 32% From 34% to 32%2003 No change – 32% No change – 32%2004 From 32% to 31% From 32% to 31%2005 – 2008 No Change – 31% No Change – 31%2009 From 31% to 29% From 31% to 29%2010 From 29% to 28% From 29% to 28%2011 28% 28%2012 From 28% to 20% From 28% to 20%2013 20% 20%2014 20% 20%
• A foreign company that establishes/relocates itsHeadquarters to Fijiwill be subject to a low corporatetaxrateof17%.
• A listed company on the South Pacific Stock Exchange(SPSE)willbesubjecttoalowcorporatetaxrateof10%.
• Income earned from trading of shares in SPSE will beexemptedfromIncomeTaxandCapitalGainsTax.
Chargeable Income ($)
PAYE Tax Payable ($)
Social Responsibility Tax (SRT) Payable
0-16,000 Nil16,001 – 22,000
7%ofexcessover$16,000
22,001– 50,000
420+18%ofexcessover$22,000
50,001 – 270,000
5,460+20%ofexcessover$50,000
270,001-300,000
49,460+20%ofexcessover$270,000
23%ofexcessover$270,000
300,001 - 350,000
55,460+20%ofexcessover$300,000
6,900+24%ofexcessover$300,000
350,001 - 400,000
65,460+20%ofexcessover$350,000
18,900+25%ofexcessover$350,000
400,001 - 450,000
75,460+20%ofexcessover$400,000
31,400+26%ofexcessover$400,000
450,001 – 500,000
85,460+20%ofexcessover$450,000
44,400+27%ofexcessover$450,000
500, 001 – 1,000,000
95,460+20%ofexcessover$500,000
57,900+28%ofexcessover$500,000
1,000,001 +195,460 + 20% ofexcessover
$1,000,000
197,900+29%ofexcessover
$1,000,000
CORPORATE TAX RATE REDUCTION
RESIDENT TAXPAYERS: 2014 PAYE AND SRT STRUCTURE
2001-2014 Investment Package
NON-RESIDENT TAXPAYERS: 2014 PAYE AND SRT STRUCTURE
C h a r g e a b l eIncome($)
PAYETaxPayable($) SocialResponsibilityTax(SRT)Payable
0-16,000 20%ofexcessof$016,001 – 22,000 3,200+20%of
excessover16,00022,001– 50,000 4,400+20%of
excessover$22,00050,001 – 270,000
10,000+20%ofexcessover$50,000
270,001 -300,000
54,000+20%ofexcessover$270,000
23%ofexcessover$270,000
300,001 - 350,000
60,000+20%ofexcessover$300,000
6,900+24%ofexcessover$300,000
350,001 - 400,000
70,000+20%ofexcessover$350,000
18,900+25%ofexcessover$350,000
400,001 - 450,000
80,000+20%ofexcessover$400,000
31,400+26%ofexcessover$400,000
450,001 – 500,000
90,000+20%ofexcessover$450,000
44,400+27%ofexcessover$450,000
500, 001 – 1,000,000
100,000+20%ofexcessover$500,000
57,900+28%ofexcessover$500,000
1,000,001 + 200,000 + 20% ofexcessover
$1,000,000
197,900+29%ofexcessover
$1,000,000
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• Investment allowance (excluding cost of labor) of 40%forextensionandrenovationexpenseswithaminimumqualifying capital expenditure of $50,000. This is onlyavailabletoexistingbusinessesinVanuaLevu.
• Accelerateddepreciationforbuildingerectedbefore2001hasbeenextendedto2014.20%depreciationforbuildingusedforagricultural, commercialor industrialpurposecanbewrittenoffwithinany5of8years.
• 100%write offwill be available in the year the expenditurewasincurredonwaterstoragefacilitiesandrenewableenergyplantandmachineries.
• Thiswillalsobeavailabletonewplantsandmachineriesusedformanufacturingpurposes.
INVESTMENT ALLOWANCE
ACCELERATED DEPRECIATION
2001-2014 Investment Package
• “Exportincome”meansnetprofitsderivedbyataxpayerfromthe business of exporting goods and services but excludesre-exports.Deductionshownbelow.
Yearofassessment Percentage of export income to bededucted
2011 50%2012 40%2013 40%2014 40%
• Export income deduction will only be allowed if theCommissioner of Inland Revenue is satisfied that the exportearningswillberemittedtoFiji.
EXPORT INCOME DEDUCTION
• Losscarriedforwardcanbeclaimedupto4years.Losscarried forward by a company is allowed if that entitysatisfies the continuity of ownership test or the samebusinesstest.
LOSS CARRIED FORWARD
PRODUCTION INPUTS• All goods used as rawmaterials in themanufacture of
approved goods not available locally will attract 3%fiscal duty + 15% VAT, and all raw material used formanufacturing by companies outside of Viti Levuwillattract0%fiscalduty+15%VAT.
CAPITAL ITEMS• Duty rates on capital items (which refer tomachinery
used for converting / processing raw materials) willattract0%fiscalduty+15%VAT.
DUTY SUSPENSION SCHEME• Enables exporters to have access to inputs without
havingtopayfordutiesupfront.• Importedgoodsareconditionallyrelievedfrompayment
offiscaldutyandVATonthebasisthatsuchgoodswillbesubstantially transformedthroughmanufacturingorprocessingandsubsequentexportation.
• TheSchemewouldentitleexporterstoimportdutyfreeanamountequaltotheproportionofapprovedimportedinputsrequiredtoproduceexports.ThisiscalledentitledProportion(EP).
• Administered by the Fiji Export Council, which is aprivatesectorledorganization.
• ZerofiscaldutyonNewMachineryandEquipmentthataredirectlyrelatedtotheproductionprocess.
DUTY CONCESSIONS
Hotel Industry Incentives
• Investment allowance (in addition to ordinarydepreciation) of 55% of total capital expenditure isallowedasadeductionprovidedthere isnoshiftof taxrevenuetoothercountries.
• Applicabletobuildingofnewhotelincludingrenovations
or refurbishments or extensions of existing hotel andInternationalRetireeFacilities.
• InvestmentAllowancecanonlybewritten-offagainsttheincome of the hotel business or income from the hotelpremises.
STANDARD ALLOWANCE
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• Lossescarriedforwardextendedto8years.• Recipients of the provisional approval for Standard
Allowance to commence implementation of projectwithinoneyear.
• Investorswould only need to provide a sketch plan toobtainprovisionalapprovalfortheinvestmentallowance,andnotnecessarilyacertifiedapproved.
STANDARD ALLOWANCE (CONT’D)
Hotel Industry Incentives
• 10yeartaxholidayforcapitalinvestmentsnotlessthan$7million.
• Import duty exemption on all capital goods (includingcapital equipment, plant &machinery) not available inFijibutthisdoesnotincludefurnitureormotorvehiclesthatareusedincarryingouttheinvestment.
• Short Life InvestmentPackage (SLIP) Incentives is alsoavailableforretirementfacilitiesandhospitalresorts.
• Recipients of the provisional approval for StandardAllowance to commence implementation of projectwithinoneyear.
• Investorswould only need to provide a sketch plan toobtainprovisionalapprovalfortheinvestmentallowance,andnotnecessarilyacertifiedapproved.
NEW SHORT LIFE INVESTMENT PACKAGE
• Income tax exemptions for locally owned backpackeroperatorswithannualsalesturnoverof$1morless.
• Dutyexemptionontheimportationofrawmaterialsandequipment used for the establishment of a backpacker
hotel.(Thisincentivewillonlybeavailabletobackpackerbusinesseswhoaregrantedtheincometaxholiday).
BACKPACKER OPERATIONS
Audio Visual Incentives
• 150%deductionforcapitalexpenditureonanF1audio-visualproduction.
• 125%deductionforcapitalexpenditureonanF2audio-visualproduction.
Levels of Expenditure in Fiji for an audio-visual production for F1 and F2 status should not be less than:
• 40%fora large format film,a feature filmorbroadcasttelevisionprogrammes;
• 50% for a direct to video programme or video diskprogramme;and
• 55%foranaudiorecording.
INCOME TAX DEDUCTIONS
• Net income from an F1 production is exempt untiltaxpayerhasreceiveda60%returnoncapitalexpended.Thereafter,netincomewillbefullytaxedatthemarginalrate.
• Net income from an F2 production is exempt untiltaxpayerhasreceiveda50%returnoncapitalexpended.Thereafter,netincomewillbefullytaxedatthemarginalrate.
INCOME TAX EXEMPTION
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• Anysoleproprietor,partnershiporcompanythatcarriesonaproductionactivity(theproductionof,distributionoforsupplyofservicestoaudio-visualproductions)mayqualify for anoperating licence in the StudioCity ZoneandbeentitledtoanexemptionfromtaxontheincomefromtheproductionactivitycarriedonintheZone.
• Tax free status for “permanent residents”of the StudioCity Zone on income derived as earnings from audio-visualproductions.
For residence in the Zone to be approved, in the case
of citizens, the individual must be:• residentintheZoneforatleast183days;• havepre-taxaudiovisualearningsinexcessof$100,000;
• havefixedassetsintheZoneinexcessof$250,000;and• maintainaprimaryplaceofresidenceintheStudioCity
Zone. For residence in the Zone to be approved, in the case
of non-citizens (or a citizen who derives a minimum of 80% of audio visual earnings from outside Fiji), the individual must be: -
• residentintheZoneforatleast60days;• havepre-taxaudiovisualearningsinexcessof$100,000;• havefixedassetsintheZoneinexcessof$250,000;and• maintain a permanent place of residence in the Studio
CityZone.
STUDIO CITY ZONE CONCESSIONS
Audio Visual Incentives
Summary Part IV, 6th Schedule – Income Tax ActFijiFilmTaxRebateBill
RebateAmount
47%taxrebateorcreditonproductioncostsspentinFiji:paragraph68(1)
Eligibility Filmsandtelevisionproductions,asperexistingSixthSchedule:paragraph69
MinimumSpendincountry
MinimumspendinFijiF$250,000forfeaturefilmsandbroadcasttelevision;and$50,000forproductionintendedasanadvertisingprogramorcommercialinatleastonesignificantinternationalmarket:paragraph69(e)
MaximumRebate
F$11.75million,soevenifmorethan$25millionspentinFijithemaximumrebateisstillF$11.75million:paragraph68(2).
Exclusions Whereaproducerhaschosentoaccessthefilmtaxrebate,theproducerwillnotbeabletoobtainanyothertaxconcessionsunderParts3ofSixthSchedule:paragraph67(2).
Additional Incentives (Allowable Expenditures):• Allowable expenditure incurred for services rendered
by the producers (producer’s fees) – provided thatsuch expenditure shall not exceed10%of the total FijiExpenditure. Producers are not restricted to remain inFijithroughouttheproductionofthefilm.
• 75%oftheexpenditureincurredtopurchasecostumes,make-up and set design properties not available in Fijithat will be used in relation to the film production inFiji provided that any such costumes,make-up and setdesign properties shall be left in Fiji at the end of theproduction.
• Expenditureincurredtopurchasethewriter’sstoryandrights for the production of the film provided that theproducersubmitsthefollowingdocumentaryevidence:
o Notarized legal contract with the writer which isregistered in Fiji with the Registrar of Deeds uponpaymentoftheappropriatestampduty;
o Evidenceofpaymentmadedirectlyintothewriter’sbankaccountfromtheFijibankaccount;and
o Receiptofacknowledgementofpaymentreceived.• Approvedpost-productionexpenditureonthefilmpaid
fromaFijibankaccounttotheextentthatitisincurredorreasonablyattributable toapprovedpost-productionservices in relation to the completing of the filmmadeinFiji.Themaximumpayableinrebateshallbegrantedupond the production of documentary evidence of theexpenditure. Rebate is around 2%-2.5% of productionbudget.
• Expendituresincurredonhiringofcamerasandfilmingequipment from outside Fiji, where such cameras andfilmingequipmentarenotavailableinFiji.
Additional Requirements:• CompaniesshouldengageAudioVisualAgents• Fijiasalocationneedstobeaccreditedandacknowledged
inthefilm’screditsandotheraccreditationasstipulatedbyFilmFijiintheirapprovalletter.
FILM TAX REBATE
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Agriculture Incentives
• TheImportationofallagriculturalitemswillbesubjecttozeroDuty.
COMMERCIAL AGRICULTURE AND AGRO-PROCESSING
• Theincomeofanynewactivityincommercialagriculturalfarming and agro-processing approved and establishedfrom 1 January 2010 to 31 December 2014 shall beexempt from tax for 10 consecutive fiscal yearswith acapitalinvestmentof$2,000,000ormore.
NEW BUSINESSES FROM 2009 ONWARDS
• 10yeartaxholidayisavailabletoataxpayerundertakinganewactivityinprocessingagriculturalcommoditiesintobio-fuelsasapprovedbytheCommissionerfrom1January2009to31December2014.Toqualify,thetaxpayermusthave:-
- Minimumlevelofinvestmentof$1,000,000;and - Employ20localemployeesormoreforeveryincomeyear.• Dutyfreeimportationofplant,machineryandequipmentforinitialestablishmentofthefactory.• Dutyfreeimportationofchemicalrequiredforbio-fuelproduction.
BIO – FUEL PRODUCTION
Small And Micro Enterprises
Incometaxexemptiontobeapplicabletoselectedsectorswithmaximumturnoverthresholdof$500,000.Thesectorsinclude:• AgricultureandFishing(SugarcaneFarmers;Coconuts;Rice;Ginger;Yaqona;Fishing;RaisingLivestock;Vegetable;dalo,
cassavaandotherrootcropsproduction;farmingandBeekeeping).• Tourism(SeaCruiseandRivertourOperators).• CommunityandSocialServices(Amusement,recreationservices;traditionalhandicraftproducers(not“middleman”or
agents).• Supportive projects to tourism industry (flora, fauna and other natural characteristics of Fiji; and history, traditions,
culturesandwaysoflifeofitspeoples).
SMALL AND MICRO ENTERPRISES
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Tax Free Region (TFR) Incentives
Who will qualify for this incentive?This incentive is available to a newly incorporated entityengagedinanewtrade,businessormanufactureestablishedinthefollowingareas:-• Vanua Levu – included Taveuni, Rabi, Kioa and
other islands generally included for government’sadministrativepurposeasbeingintheNorthernDivision.
• Rotuma• Kadavu• Levuka• Lomaiviti• Lau;and• EastofVitiLevu(Korovou-Tavuaregion)
• AnycompanymayapplytotheMinisterforFinanceinaprescribedform(Form6)foranoperatinglicense.
Criteria for Grant of License• Thecompanyisanewlyincorporatedentityengagedina
newtrade,businessormanufacture.• The minimum initial level of investment should be
$250,000from1January2010.
Tax Exemptions Available(i)Theincomeofanynewactivityapprovedandestablished
between1 January2010to31December2018shallbeexemptfromtaxasfollows:• capitalinvestmentfrom$250,000to$1,000,000,for
aperiod5consecutivefiscalyears;or• capital investment from $1,000,000 to $2,000,000,
foraperiodof7consecutivefiscalyears;or• capital investmentabove$2,000,000foraperiodof
13consecutivefiscalyears.
Duty Exemption Importdutyexemptionontheimportationofrawmaterials,machinery and equipment (including parts and materials)insofar as they are required for the establishment of thebusinessintheTaxFreeRegion.
Other benefits under the TFR• Additional5yearsof incometaxexemption isavailable
toanycompanygrantedalicenseandhavingindigenousFijianlandownerequityofatleast25percent.
• Additional7yearsof incometaxexemption isavailableto any hotel developer granted a license and havingindigenousFijianlandownerequityofatleast25percent.
TFR INCENTIVES
Information Communication Technology (ICT) Incentives
ICT INCENTIVES
Theincomeofanynewoperatorwhoisgrantedalicensefrom1January2009tobeexemptfromtaxforaperiodof13years
• Any new operator may apply and pay a license feeof $1,000 per annum to the Commissioner of InlandRevenue.TheTaxexemptionisgrantedfromthedateoftheinitiallicense.
• Incometaxexemptionisavailabletoinvestorsunderthefollowingcriteria:-
• Business employs 50 employees ormore for any 6monthswithintheincomeyear;and
• 60percentofitstotalservicesisexported.• Duty free importation of computer, computer parts &
accessories, plant, equipment & fittings, and specilisedfurnitureforinitialestablishmentandduringitsongoingoperations to approved ICT/BOP Business operatorsfrom1January2009.
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Manufacturers Incentives
- 100% of the amount of investment as a deductionfor investing in food processing as well as forestry.Re-investment will also be allowed for expansionpurposes.Inordertoqualify,theinvestorshouldutilize50%oflocalproduceinitsproductionprocess.
FOOD PROCESSING & FORESTRY
• 5yeartaxholidayisavailabletoataxpayerundertakinganewactivity in renewableenergyprojectsandpowercogenerationasapprovedbytheCommissioner.
• Dutyfreeimportationofrenewableenergygoodsisalsoavailable.
RENEWABLE ENERGY PROJECTS AND POWER CO-GENERATION
Other Incentives
Maritime Shipping- 100% of the amount of investment as a deduction
for investing in food processing as well as forestry.Re-investment will also be allowed for expansionpurposes.Inordertoqualify,theinvestorshouldutilize50%oflocalproduceinitsproductionprocess.
SHIPPING COMPANIES UNIT TRUST COMPANIES
Withholding Tax and Capital Gains Tax Waiver- Withholding taxes and capital gains taxes on interest
incomedistributiontoinvestorsoftheUnitTrustswillbewaived.
• This Programme is open to citizens of other countriesrecognized by Fiji in the “Fiji My Second HomeProgramme”asadministeredbytheReserveBankofFiji.
• Interest incomeisexemptfromtaxunderthefollowingcriteria:-
o Agebelow50yearsold:• Minimumdepositof$150,000andmaintainthe
depositinFijiforaminimumoftwoyears. o Age50yearsandabove::
• Minimumdepositof$100,000andmaintainthedepositinFijiforaminimumoftwoyears.
• To qualify the applicant must maintain a minimumbalance of $50,000 from the third year onwards andthroughouttheentirestayinFiji.
FIJI MY SECOND HOME PROGRAMME FOREIGN CURRENCY ACCOUNT SCHEME
• Interest incomeisexemptfromtaxwhichaccruestoorinfavorofanon-residentincludingformerFijiresidentswhoholdfundsinFijicommercialbankaccountsunderthefollowingcriteria:-- For foreign currency accounts, interest income for
depositabovetheequivalentofFJD$150,000;- For Fiji Dollar accounts, any amount of interest
income.
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• Employment Taxation Scheme– 150%of the salary andwages paid by an employerwithin 1 January 1997 and 31December2018are taxdeductible.Thededuction is restricted tosalaryandwagespaid inrespectof12-monthperiodcommencingfromthedateoftheappointmentoftheemployeeprovidedheorshehasnotpreviouslybeeninfull-timepaidemployment.Thisisextendedtotraineesandapprentices.
• DonationofnewComputers,Laptops&Tablets-150%and200%taxdeductionsfordonationofcomputerstoschoolsregisteredwiththeMinistryofEducation,willbeavailablewiththefollowingfeatures:- 200%taxdeductionrelatestodonationtoschoolsinruralareas.- 150%taxdeductionrelatestodonationtoschoolsinurbanareas- Donationstobebetween$10,000to$100,000.
• Voluntary Contribution for Disaster Relief - 150% tax deduction for voluntary contribution of cash donation bybusinessestowardsaDisasterReliefFund.Thethresholdwillrangefromaminimumcontributionof$10,000toamaximumcontributionof$100,000.
• SportsSponsorship-150%taxdeductionforsportssponsorshipwithaminimumcashsponsorshipof$50,000.
• SponsorshipofhiringofinternationalCoaches–150%taxdeductionforsponsorshipbetween$100,000and$200,000towardsthehiringofinternationalsportingcoaches.
• CashContributiontowardsHousingProjects -150%taxdeductionforcashcontributionsupto$50,000towardsanyGovernmentsanctionedhousingprojectforsquattersandinformalsettlements.
• IncentivesforSeniorCitizens-AllSeniorcitizens(over55years)andPensionerswillbeexemptedfrompayingresidentinterestwithholding tax on interest incomeof up to $16,000 frombankdeposits, provided this is their only source ofincome.
OTHER INCENTIVES
Other Incentives
OTHER CUSTOMS CONCESSIONS
Newly introduced concessions
Items Descriptions FiscalDuty
VAT(%)
Food Supplements
Reducefiscaldutyonfoodsupplementsfrom32%to0%Foodsupplementsincludeessentialvitaminsandfortificationswhicharepredominantlyusedbypregnantmothers,seniorcitizensandchronicallyillpatients.
0% 15%
Babyfeedingbottles
Reducefiscaldutyonbabyfeedingbottlesfrom32%to0%.Toreduceimportationofcheaplowqualitybabybottleswhichmaycausehealthrisks.
0% 15%
ShippingIncentives
Dutyontheimportationofallsparepartsformaritimevesselsisreducedto0%. 0% 15%
PromotedomesticFishingindustry
ExemptionofBunkerfeeof2cents/litreforlocalfishingvessels;Dutyconcessiononspecializedfishingitem/equipmentwhicharecurrentlynotcoveredundertheexistingconcessionforthefishingindustry.
- -
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Items Descriptions FiscalDuty VAT(%)
Agriculture Dutyontheimportationofallagriculturalitemswillbereducedto0%. 0% 15%Adultsanitarydiapers
DutyontheImportationofallsanitarydiaperswillbereducedto0% 0% 15%
Pre-fabricatedhomes(kithomes)
Dutyonprefabricatedhomeswillbereducedfrom32%to3%anddutyonprefabricatedconcreteproductsandironpanelsforcommercialusewillbereducedfrom32%to5%.
Prefabhomes(3%)
Prefabconcrete&Ironpanels(5%)
15%
Dutyconcessionforreturningresidents
Dutyconcessionundercode220(FreeFiscal,Freeimportexcise,FreeVAT)onimportationofhouseholdeffectsandvehiclesbyreturningresidents.ThisconcessionissubjecttocertainconditionsunderCode220.
0% Free
NEWLY INTRODUCED CONCESSIONS (cont’d)
Other Customs Concessions
Industry Items F i s c a lDuty
V A T(%)
Agriculture&Dairy
Specialised agriculture, livestock and dairy machineries, equipment and agriculturalinputs excluding those that attractduty ratesof freeFiscal and free ImportExcise intheTariff.TheimportationunderconcessionissubjecttotheconditionthataletterofapprovalisissuedbytheMinistryofAgricultureinrelationtogoodsunderconcession.
Free 15%
B u sOperators
BusoperatorsholdingRoadServiceLicenceoperatingunderscheduletripsapprovedbyLandTransportAuthority.Refund of duty on gas oil (diesel) having sulphur content not exceeding 500ppmpurchasedex-dutypaidstock.
2 centsper litrerefund
Fisheries &Forestry
Specialisedmachineriesdirectlyusedforfisheriesandforestrypurposes.Theimportationunder concession is subject to the condition that a letter of approval is issued byDepartmentofFisheries&DepartmentofForestsinrelationtogoodsunderconcession.
Free 15%
M a r i t i m eS a f e t yAuthority ofFiji(MSAF)
LifejacketsprocuredfromlocalmanufacturersoperatingunderTFForDSS.Theimportedrawmaterialsincorporatedinthemanufactureoflifejackets.
Free 15%
S p o r t sSupplement
Protein shakes and sporting tablets/capsules that will enhance athletic performancebysupplyingnutrientstothebodywhicharelostintheprocessofstrenuoustrainingand fitness programs. This concession does not extend to the products Powerade,Gadtorade,RedBull,V-DrinkandMother,etc.
Free 15%
OTHER EXISTING CONCESSIONS
DISCLAIMER
These incentives are available as at 1st January 2014. For their availability and application, please contact FRCA Policy and Research Unit: Phone: (679) 3243021 Fax: (679) 3302 321e-mail: FRCA-Policy&[email protected]: www.frca.org.fj