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Income Tax in Fiji


Personal Income Tax

Residence Rules:

For tax purposes, an individual is considered a resident if he/she actually resides in Fiji, or:

·        whose domicile is in Fiji, unless the tax authorities are satisfied that his/her permanent place of abode is outside of Fiji or
·        who has been in Fiji either continuously or intermittently for more than one-half of the income year, unless the tax authorities are satisfied that his/her usual place of abode is located outside of Fiji and that there was no intention to become resident in Fiji.

Compliance Requirements For Tax Returns In The Fiji Island:

Residents:

Every person liable to taxation under the Income Tax Act of Fiji is required to lodge an income tax return with the tax authorities declaring all sources of income by 31 March of every year in respect of the income in the immediately preceding year.

Fiji has a PAYE (Pay-As-You-Earn) system pursuant to which PAYE tax is deducted at the source by the employer and remitted to the Inland Revenue. An individual who derives income from employment or from any other sources is required to file an annual income tax return based on a calendar year.

An individual who derives taxable income from sources other than employment is also required to make provisional tax payments in three equal installments (30 April, 31 August, and 30 November). The installments are usually based on the previous year’s income tax assessment.

Under the Tax Administration Decree of 2009, for late lodgment of income tax returns the maximum penalty is 20 percent of the amount of tax outstanding under the return and FJD1.00 per day in any other case. For the late payment of tax there is a flat rate of 25 percent of the outstanding balance that is charged, irrespective of the length of the delay.
   
Non-residents:

The compliance requirements for non-residents are basically the same as that of the residents, except where the assignee is on a three-year contract in Fiji they need only declare their Fiji-sourced income. The tax authorities may demand for the lodgment of the final tax return and settlement of the tax matters before the departure of the individual from Fiji.

Tax Rate:

Chrgeable Income(FJD)
Tax Payable(FJD)
0 – 30,000
Nil
30,001- 50,000
18% of excess over FJD30,000
50,001 – 270,000
FJD3,600 + 20% of excess over FJD50,000
270,001 – 300,000
FJD47,600 + 20% of excess over FJD270,000
300,001 – 350,000
FJD53,600 + 20% of excess over FJD300,000
350,001 – 400,000
FJD63,600 + 20% of excess over FJD350,000
400,001 – 450,000
FJD73,600 + 20% of excess over FJD400,000
450,001 – 500,000
FJD83,600 + 20% of excess over FJD450,000
500, 001 – 1,000,000
FJD93,600 + 20% of excess over FJD500,000
1,000,001 +
FJD193,600 + 20% of excess over FJD1,000,000

Taxable Income:

There are three main categories of incomes of individuals, namely:

·        income from employment.
·        income from property.
·        income from business/investments.

Income from employment:

For taxpayers that receive income from employment, their total income will include income from emoluments. This includes:

·        salary, wages, overtime, bonus, remuneration.
·        gratuities.
·        the estimated annual  total of any quarters or board or residence.
·        the estimated annual  total of any other allowance granted in respect of employment (in cash).
·        stipends.
·        commission, or other amounts for services.
·        directors’ or management fees.
·        retiring allowances or pension, accruing in, derived from or received in Fiji.

All employment income  is subject to PAYE Final Tax; however, some payments are exempt from tax.

An employee who also receives income from business or share of estate/ partnership must lodge a business return.

Income from property:

This includes the following:

·        rental/lease income (excluding native lease), whether derived individually, through a Real Estate Agent or the government.

Income from business/investments:

This includes the following:

·        interest received from loans/money lending whether licensed or not.
·        dividends received from shares/investments.



Corporate Income Tax:

Resident Rules:

A company is considered to be resident in Fiji if it is incorporated under Fiji law. Companies incorporated under foreign law are considered to be Fiji resident if they carry on business in Fiji and have either its practical management and control in Fiji, or its voting power controlled by resident shareholders. Non-resident companies are taxed only on their Fiji sourced income. Resident companies are taxed on their worldwide income.

Tax Rate:

Corporate Entity
Tax Rate(%)
Resident/Non-Resident companies
20
Listed companies in the South Pacific Stock Exchange (SPSE)
10
Foreign companies whose regional/global headquarters are based in Fiji
17

International Withholding Tax Rates:

Dividends paid or credited to a non-resident are subject to withholding tax at 15 percent to the extent that the underlying profits have not been subject to corporate income tax. Fully qualifying dividends are not subject to withholding tax. The rate of withholding tax may vary under a tax treaty.

Royalty payments to non-residents are subject to withholding tax at 15 percent. This rate may vary under a tax treaty. Royalty withholding tax is also applicable to residents at 15 percent.

Miscellaneous payments (such as know-how payments, management payments and professional services) to nonresidents are subject to withholding tax at 15 percent. This rate may vary under a tax treaty.

Interest payments to non-residents are subject to withholding tax at 10 percent. This rate may vary under a tax treaty. A separate resident withholding tax regime exists.

The recipient of the payment (or to whom the payment accrues) is liable for the withholding tax, which is levied at the earlier of payment or crediting of the dividend, royalty, miscellaneous payment or interest and payable by the end of the month following payment or crediting. Notwithstanding this, the tax is payable and recoverable from the person or agent by whom such payment is made or credited.

Dividends and imputation:

Company tax paid generates qualifying dividend tax credits, which can be attached to dividends paid. Qualifying dividend tax credits can be used by non-resident shareholders to reduce non-resident dividend withholding tax on the dividend.

Dividends received by resident companies from Fiji incorporated companies are exempt from income tax.

Dividends received by a resident shareholder from companies listed on the South Pacific Stock Exchange are exempt from income tax.

Dividends received by resident companies from non-resident subsidiaries are subject to income tax in Fiji, with foreign tax credits generally allowed for withholding tax paid in respect of such dividends. The quantum of foreign tax credits allowed is capped (and a calculation is required). Tax credits are not recognised in respect of any underlying taxes on the foreign sourced dividend.



Capital gains:

Capital Gains Tax (CGT) is a transactional tax and is payable at a rate of 10 percent on the capital gain on disposal of certain capital assets. Capital losses are not recognised for CGT purposes. The historical cost base is applicable for the purpose of calculating any capital gain or loss.

Non-residents are only subject to CGT on Fiji assets as defined in the CGT Decree.

Tax Losses:

Tax losses can only be carried forward for a period of 4 years, effective from 1 January 2012. There is no provision for the carry back of tax losses. There is no provision for the grouping or offset of tax losses. The carry forward of tax losses has two tests, continuity of ownership and continuity of business.

Company advance tax:

Fiji has a company advance tax regime. Companies are subject to advance tax payments based on the immediately preceding year’s income tax assessment as follows:

·        Due 6 months before balance date : 33.3 percent
·        Due 3 months before balance date : 33.3 percent
·        Due by balance date : 33.4 percent

Compliance requirements:

Company income tax returns are required to be lodged within 3 months following the balance date. The mandatory filing dates apply unless the company is linked to a ‘tax agent’ under the Tax Agents Lodgement Programme whereby a deferred filing date may be approved where the company’s tax affairs are in order.



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Note: Information placed here in above is only for general perception. This may not reflect the latest status on law and may have changed in recent time. Please seek our professional opinion before applying the provision. Thanks.


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This blog is Created by CA Anil Kumar Jain.