Changes in Fiscal Duty

The Fijian Government will continue to market its properties at the Kalabu Tax Free Zone, which is being sold to interested investors, as sales will complete the process of transferring KTFZ assets in Suva to the private sector.

This was noted as the Ministry for Finance announced the 2017-2018 National Budget on June 29. And effective from 1 August, the Fiji Revenue & Customs Authority will be renamed Fiji Revenue & Customs Services, which it says will reflect the organization’s shift in institutional values towards improving customer service delivery.

The Budget was noted by Attorney General and Finance Minister, Aiyaz Sayed-Khaiyum in Parliament, with key fiscal duties also stated.

  • A New Dwelling House VAT Refund Initiative will entitle eligible persons maximum VAT Refund claimable. This is part of amendments to the VAT Decree, allowing Value Added Tax refunds on new dwellings, so long as the dwellings are the first residential property of eligible persons, and include the sublet of their property to support loan repayments. This is also aims to increase home ownership by Fijians.
  • Also being amended is the Income Tax (Residential Housing Development Package) Regulation 2016, plus incentives on residential housing to make it more affordable for potential, average Fijian home buyers. Additional incentives will include investors who may partner with the Government to provide affordable housing, by way of building housing units, with Government subsidizing returns on investment through rental payments up to a reasonable amount.
  • To spur more construction, several tax incentives have been introduced.  Fiscal import duty on fabricated steel structures is reduced from 32 to 5 per cent. Fiscal import duty on insulated (electrical) cables is reduced from 32 to 5 per cent, so long as Fijian standards are met. Fiscal import duty on fabricated steel structures is reduced from 32 per cent to 5 per cent. Fiscal import duty on glues, epoxies, sealers, protective coatings, polishes cream and related appropriations is reduced from 15 to 5 per cent. Fiscal import duty on steel and aluminium louver frames is reduced from 32 to 5 per cent. Import excise duty is increased from zero to 5 per cent.
  • Additionally, duty has been reduced on roofing framework, plates, rods, angles, shapes, sections, tubes and related material prepared for use in the structures of iron or steel (fabricated), while duty has however, been increased on the importation of prefabricated buildings.
  • Duty-free concessions have been put in place for the importation of vinyl sheet piling, duty free concession has been introduced on the importation of vinyl sheet piling, geotextile material, which is aimed at enabling lower costs in the construction of seawalls, a central provision to combat rising sea levels and flooding in vulnerable communities.
  • Revenue receipts from Stamp Duties amounted to $74.1 million in the FY 2015- 2016. For the FY 2016-2017, recipients are anticipated to grow to $84.2 million, an increase of 10.1 million or 13.6 percent from the previous financial year. Stamp duty receipts in the FY 2017-2018 are projected to increase to $97.8 million. The current increase in the collection of the Stamp Duty is largely driven by increased activity in Fiji’s real estate sector.
  • To provide greater market certainty and support targeted investment, the following tax incentives have been introduced, extended, restructured or maintained:
  • All Tax-Free Regions and the Commercial Agriculture, Bio-fuel and Accelerated Depreciation initiatives have been extended from 2018 until 2028.

Incentives for Bio-fuel include the following:

  • Investments between $250,000 and $1.0 million are granted a 5year tax holiday;
  • Investments between $1.0 million and $2.0 million are granted a 7year tax holiday; and
  • Investments above $2.0 million are granted a 13- year tax holiday.
  • Only buildings used for Agriculture, ICT, Fisheries and Forestry purposes receive accelerated depreciation, which will continue to be granted to new plants and machineries for manufacturing, water storage facilities and renewable energy.
  • The current accelerated depreciation available to buildings used for all other commercial and industrial purposes will end from 1 January 2019.
  • All Cooperatives that receive assistance from Government for any project, for example, localised hydro power stations, will be accorded income tax exemption for five years, in line with existing renewable energy incentives.

The new National Budget has also increased funding for affordable homes from $25 million to $60 million, while stamp duties on non-residents transfer of strata titles has been increased.

The Finance Ministry noted that Government’s revenue areas encompassed unpaid taxes, fees, rates, charges, penalties and fines. As of April 30, this year, total arrears stood at $223 million, which the Ministry noted was a significant increase of $59.0 million compared to the end of 2016. This has mainly been attributed to an increase in unpaid, direct taxes and water bills. At $121.6 million, unpaid taxes constituted the largest portion of arrears, followed by unpaid Crown lease rentals ($35.8 million), water bills ($33.8 million) and judicial, court fees, fines and charges, which stood at $13.2 million.

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