THE Fijian Government continues to reform and refine its policies to modernise Fiji and propel economic growth further despite the successfully achieving eight years of consecutive economic growth.
Through the Fiji Revenue and Customs Service, it has introduced compliance measures that enables individuals and non-individuals to voluntarily comply to the tax laws of Fiji.
Our aspiration is a Fijian Society of high integrity and honesty wherein every taxpayer must feel a national pride and a civic duty in paying taxes.
We must see that paying taxes is our contribution to growing Fiji, enabling Government to provide public goods and services such as road infrastructure, free medical, free educations, social welfare payments, subsidised electricity and water, rural electrification projects etc. in raising the standard of living for every citizen.
The Government has equipped the Fiji Revenue & Customs Service (FRCS) with all necessary resources to better collect taxes by supporting our taxpayers to voluntarily comply to their tax obligations and at the same time clamp down on non-compliance and tax cheaters and protect our boarders more effectively through the use of effective measures.
In this week's article we look at the importance of a tax compliance certificate and how this compliance measure has been used as a way to enable resident individuals and non-individuals to voluntarily comply with their registration, lodgment, reporting and payment obligations.
What is a tax compliance certificate?
A tax compliance certificate(TCC) is an official documented confirmation issued by the Fiji Revenue & Customs Service to a taxpayer as a proof that:
i. Payment of tax liabilities and customs duty are up-to-date or satisfactory payment arrangements are in place and;
ii. All tax returns have been lodged or satisfactory filling arrangements have been made with the Fiji Revenue & Customs Service.
In other words, the tax compliance certificate is a signed and stamped document issued by FRCS which provides proof that a taxpayer's tax lodgments and payments are satisfactory at the time the certificate is issued.
However, it must be noted that TCC does not necessarily confirm the accuracy of declarations which are subject to confirmation through an audit process.
Persons required to apply for a tax compliance certificate
Any resident individuals or non-individuals that submit an expression of interest or tender to supply goods and services for any government or public sector business contract; or applies for any registration, permit or license from any government ministry or entity must ensure that they obtain a valid tax compliance certificate from the Fiji Revenue & Customs Service.
It may also be issued upon request to any applicant whose tax affairs are in order and who requires a TCC for personal reasons e.g. loans, travel visas, employment, migration, etc.
This means that all individuals and non-individuals that wish to register or renew a business license or permit will be required to obtain a tax compliance certificate from FRCS.
On the other hand, businesses, companies and entities that wish to submit an expression of interest or business tender must firstly obtain a tax compliance certificate from FRCS.
In addition to these, there are also government appointed bodies or boards that administer the issuance and renewal of practicing licenses to members of professional bodies or institutes.
All resident individuals and non-individuals that wish to apply for a tax compliance certificate must firstly ensure that they have a proper tax identification number (TIN) to be able to obtain a valid tax compliance certificate from the Fiji Revenue & Customs Service.
Failure to obtain a proper TIN will result in the delay and non-issuance of a tax compliance certificate.
To assist in timely processing, applicants should ensure that other information required on related parties (e.g. TINs of related parties where required are correct and their tax affairs up to date).
This means that FRCS conducts a complete compliance check when a TCC application is received. For non-individuals like companies and partnership businesses the TINs of directors and partners are also important as FRCS checks on the compliance level of directors and partners.
All TCC applications must be completed on the prescribed form titled "Application Form for Tax Compliance Certificate for Individuals and Non-Individuals". The TCC application form can either be downloaded from our website: http://www.frcs.org.fj/tax-compliance-certificate/ or obtained from any of our FRCS customer service centres Fiji wide.
Validity of a tax compliance certificate
All tax compliance certificates have a one-year validity period hence it can only be used for that particular year.
All tax compliance certificates will always be valid from January 1 to December 31 of every year. Depending on the particular date the TCC was approved and issued will it be also effective or valid.
For example, if the TCC application was issued by FRCS on June 18, 2018 then it will be valid from this date onwards until December 31 of the same year.
In other words, all tax compliance certificates issued for a particular year become invalid after December 31 of every year.
Where a satisfactory arrangement has been made between the taxpayer and FRCS, then the TCC validity period will be issued based on the applicant's level of tax compliance.
In other words, it might not be necessarily a period of one-year but could be lesser such as one month, three months etc.
Dishonouring tax arrangements
While the intention of the tax compliance certificate is to assist taxpayers to voluntarily comply to their tax obligations, it is unfortunate for FRCS to note that some individuals and businesses continuously use this compliance mechanism as a way to beat the tax system.
One of the most common issue that FRCS has established when payment and lodgment arrangements are made is the tendency of taxpayers to continuously dishonour tax arrangements after a tax compliance certificate has been issued.
This creates an environment of dishonesty and distrust towards FRCS's efforts to assist taxpayers. To make things worse, FRCS is concerned at the number of tax agents and accountants that are involved and have not honoured payment and lodgment arrangements with FRCS.
This is simple negligence and FRCS will not entertain such practices.
This is the type of behavior that FRCS wishes to eliminate from its partners and taxpayers. It is important for taxpayers to understand that where a satisfactory tax return lodgment or tax payment arrangement has been made with FRCS, it is the duty of the taxpayer to ensure that the arrangements become a point of priority to settle before it becomes due.
In other words, regardless of whether it is an individual, business or company they must ensure that tax arrangements are properly honoured.
The Fiji Revenue & Customs Service wants individuals and businesses to come forward and make formal tax arrangements where they are unable to meet certain lodgments and payment deadlines however it is equally important for them to honour such arrangements with the service.
Hence by allowing formal tax arrangements to be made with the service, FRCS allows them time to lodge and pay.
Tax compliance certificate application for 2018
All resident individuals, businesses, companies and entities that wish to apply for a tax compliance certificate for the year 2018 can start sending their TCC applications to FRCS from January-2018 onwards.
The completed application forms can either be sent to FRCS by post, email or submitted to any FRCS customer enquiry centre.
Partnership and education
There is now an increased level of partnership between FRCS and its stakeholders which is achieved through targeted awareness and educational forums.
A number of organisations are now realising the importance of its customers or members being tax compliant.
For instance, lending institutions in Fiji have incorporated TCC as part of their processing requirements.
Certain professional bodies are now requiring TCC for its members as part of the issuance and renewal of practising licences. FRCS has noted that through partnerships, it is an opportunity to educate taxpayers and assist them to clearly understand their obligations.
Free of charge service
In its efforts to maximise voluntary compliance the Fiji Revenue & Customs Service is reaching out to businesses and individuals to provide assistance effectively at no cost at all.
FRCS wants to eliminate the fear environment that businesses have to deal with when they do business with the tax office.
This is a perception that the tax office wishes to eradicate permanently hence FRCS is inviting businesses to come forward and advise us of their tax needs.
The Fiji Revenue & Customs Service also understands that individuals, businesses and companies are unable to meet their lodgment and payment obligations at times because of different reasons hence why FRCS provides assistance by allowing individuals, businesses and companies time to lodge and pay through a formal arrangement with FRCS.
Businesses that are facing difficulties in relations to return lodgments, preparation of financial accounts, tax calculations, proper record keeping etc. are urged to contact our officers at any FRCS office for assistance. The Fiji Revenue & Customs Service will assist businesses at all costs to enable them to comply.
The use of tax compliance certificates as a compliance mechanism for resident taxpayers necessitates the need for FRCS to regularly conduct checks on the compliance status of taxpayers through the use of this document.
Not only has the use of tax compliance certificates brought about ways to identify compliant taxpayers but it has also increased FRCS's ability to identify non-compliant taxpayers and use necessary means to enable them to voluntarily comply.
The overall objective of tax compliance certificate is to assist Fijians understand and meet their tax obligations; the Fiji Revenue and Customs Service endeavours to make it easier for all to comply.
This article was authored by the Fiji Revenue & Customs Services and originally published in The Fiji Times on February 7, 2018.