WE have noted Government’s monetary assistance towards the construction of family home for those households whose annual income is less than $50,000. This week senior business reporter ROPATE VALEMEI speaks with Fiji Revenue and Customs Authority acting CEO Visvanath Das on residential, housing, development and Information Communication Technology (ICT) incentives.
TIMES: Are there any incentives for investors who may want to assist or invest in residential housing development?
DAS: Yes, the Government has introduced the residential housing development incentive package which comprises a set of benefits for companies/investors undertaking the residential housing development.
‘Residential housing development’ means the development of buildings for residential purposes, including the subdivision of residential lots.
The income of the company undertaking the residential housing development shall be exempt from tax on developer profits from the sale of residential units.
The company will also be granted a subsidy of up to a rate of 5 per cent of the total capital expenditure incurred in the residential housing development provided that the capital expenditure is not less than $2,000,000 and not more than $10,000,000; and of up to a rate of 7 per cent of the total capital expenditure incurred in the residential housing development provided that the capital expenditure is more than $10,000,000.
Furthermore, the company will be entitled for import duty exemptions for the importation of all capital goods required to carry out the residential housing development project. Capital goods refers to capital equipment, plant, machinery and any other goods employed in the production of other goods but does not include kitchenware, raw materials, furniture, fittings or motor vehicles.
TIMES: Are there any conditions on the investment threshold or the minimum number of houses to be built in order to qualify for this incentive?
DAS: The incentive is available to companies with a minimum capital investment (including the cost of support infrastructure and overseas consultant fees but excluding the cost of land) of $2,000,000 with about 20 residential housing units. The residential housing development has to be completed within two years from the date the provisional approval is granted.
TIMES: Who provides the provisional approval?
DAS: The provisional approval is granted by the Minister for Finance in concurrence with the minister responsible for housing.
TIMES: What are some background checks you look for before considering an application?
DAS: When considering an application for residential housing development investment, the minister shall take into account the following:
* The assets and liabilities of the company;
* the nature and extent of the residential housing development investment;
* the requirements for residential housing development in the area concerned;
* whether the residential housing development complies with the Housing Authority requirements;
* whether the residential housing development investment will adequately contribute to the area concerned;
* whether the proposed residential housing development is of a suitable size and standard for the area concerned; whether adequate amenities would be provided as part of the proposed residential housing development; and
* Such other matters as the minister may consider relevant to the desirability or otherwise of the residential housing development investment for Fiji and the capability of the company to complete it.
TIMES: Information Technology (IT) plays a very important role in today’s modern world in terms of processing and managing data, analysing trends, generating high level reports, research and networking. How do you define ICT business in terms of taxation in Fiji?
DAS: For tax purposes, ICT businesses are those that provide services by way of software development, call centres, or internet services but does not include an internet café or any retail or wholesale of information technology products or the repair, sale or service of any such products.
TIMES: What are the Information Communication Technology (ICT) incentives available for investors in Fiji?
DAS: Tax incentivesc available for ICT operators are as follows:
(1) The income of any ICT operator operating in the declared Kalabu Tax Free Zone (TFZ) from January 1, 2007 to December 31, 2016 shall be exempt from income tax for a period 10 years.
(2) The income of any new Information Communication Technology (ICT) operator operating who is granted a licence from January 1, 2009 onwards shall be exempt from tax for a period of 13 years.
(3) The income of Information Communications Technology (ICT) start-ups involved in application design or software development shall be exempt from income tax for a period of 13 years from the date of approval by FRCA.
The business is also allowed a deduction for 150 per cent of the amount of expenses incurred in the Information Communications Technology start-ups involved in application design or software development.
(4) The income of an accredited Information Communications Technology (ICT) training institution shall be exempt from income tax for a period of 13 years from the date of approval by FRCA. The business is also allowed a deduction of 150 per cent for the amount of expenses incurred.
TIMES: What conditions do ICT investors have to meet in order to enjoy tax holiday outlined above?
DAS: All the exemptions are subject to specific conditions.
ICT operators operating in the declared Kalabu Tax Free Zone must employ about 50 employees for any six months within the income year and export 60 per cent of its total services.
New ICT operators, new ICT operators involved in application designing and software development and ICT accredited training institutions must apply and pay a licence fee of $1000 per annum to FRCA, employ about 50 employees for any six months within the income year and export 60 per cent of its total services.
TIMES: Will there be concession on import duties and VAT on the importation of capital goods for setting up ICT businesses?
DAS: Yes, there are duty exemptions available on the importation of computer, computer parts and accessories, plant, equipment and fittings, and specialised furniture for initial establishment and during its ongoing operations to approved ICT/BOP business operators.
For any new ICT operators involved in application designing and software development and new ICT accredited training institutions, import duties and VAT payable on importation of all items required for the establishment of the business are exempted.
TIMES: Is there any capital investment threshold for any of the ICT incentives discussed above?
DAS: No there are no investment thresholds for these incentives. Anyone who will satisfy the conditions will qualify for these incentives.
TIMES: How can potential investors apply for ICT Tax Incentives?
DAS: The investor will have to make an application to FRCA to qualify for the incentive.
The application should include a comprehensive background of the project such as the director and shareholder details, statement of assets and liabilities, location and description of the site of the project, details of the business activities, sketch plan of the project, costing and financing details, completion dates, employment details, etc.
This article was first published in The Fiji Times on June 22, 2016.