Corporate tax in Fiji

Summary

Corporate Income Tax Rate (%) 20
Capital Gains Tax Rate (%) 10
Branch Tax Rate (%) 20
Withholding tax (%)
Dividend (a)
Resident individuals 3
Nonresidents 9
Interest 10
Royalties from Patents, Know-how, etc. 15
Net Operating Losses (years)
Carryback 0
Carryforward 4 (b)

a) These rates are effective from 1 January 2016 for 2016 profits. For 2014 and 2015, profits are subject to the 1% transitional rule. This rule applies to divi­dends from after-tax profits for 2014 and 2015. This tax is payable by 31 March 2016 with respect to 2014 profits, while the tax office will provide an extension for the tax with respect to 2015 profits. Profits before 2014 are subject to the 2001 dividend regulations, which are based on imputation. Dividends paid to resident companies are exempt from tax.

b) See Section C.

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 and control in Fiji or its voting power controlled by shareholders who are residents of Fiji.

Tax rates. In general, resident companies and branches of non­resident 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 communica­tions 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 is 10%. Effective from 1 January 2016, the capital gains tax is administered through the Income Tax Act 2015. Previously, capital gains tax was administered through the Capital Gains Tax Decree 2011.

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:

  • 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. Dividends received by a resident company from another resident company are not taxable.

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.

Determination of trading income

General. Income is defined as the aggregate of all sources of in­come, including annual net profit from a trade, commercial, finan­cial 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 otherwise 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 deprecia­tion rates prescribed by law for 2016 and future years.

Asset Rate  
  Straight line (%) Diminishing 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 deprecia­tion. 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 capital gains tax.

Relief for losses. Losses may be car ried 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 55% 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 different from its business in the year in which the loss was incurred.

Groups of companies. No group relief measures exist.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)
Value-added tax; imposed on virtually all
goods and services; financial services (except
insurance services) and gambling are exempt
9
Service turnover tax 10
Environmental levy; imposed on prescribed services subject to the service turnover tax 6
Fringe benefit tax 20
Social security contributions to the national provident fund, paid by:
Employer 10
Employee (maximum rate) 8

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 in­cludes paid-up capital, shareholders’ non-interest-bearing loans, retained earnings and subordinated interest-bearing loans.

Anti-avoidance legislation. Contracts, agreements or arrange­ments entered into that have the effect of altering the incidence of any tax may be rendered void by the tax authorities. However, the act does not allow for restructuring.

Treaty withholding tax rates

.                           Dividends

.                                         %

Interest

%

Royalties

%

Australia 20 10 15
India 5 10 10
Japan 15 10 15
Korea (South) 10/15 (a) 10 10
Malaysia 15 15 15
New Zealand 15 10 15
Papua New Guinea 17 10 15
Singapore 5/15 (b) 10 10
United Arab Emirates 0 0 10
United Kingdom 15 10 15
Non-treaty countries 9 (c) 10 15
    a) The 10% rate applies if the recipient of the dividends is a company holding at least 25% of the capital of the payer. The 15% rate applies to other divi­dends.
    b) The 5% rate applies if the recipient of the dividends is a company holding at least 10% of the company paying the dividends. The 15% applies to other dividends.
    c) See Section A.