TAXATION AND INCENTIVES
Government's primary aim is to establish a facilitatory investment environment to encourage export-oriented investment. Consequently, Government expenditure has been redirected towards infrastructure and productive areas required by industry. The taxation and incentives structures are also being reformed to offer more internationally competitive tax regimes to investors. Some changes have already been made and numerous others are planned for the forthcoming years.
General Investment Incentives
A system of tax incentives for exporters, who export more than 80% of their output, including a Tax Free Factory Scheme, operates. A number of double taxation agreements have also been established, whereby exemptions or tax concessions granted by the Fiji Government are not negated by the imposition of tax in the country of residence of the investor. Such agreements have been signed with Australia, Japan, New Zealand, the UK, South Korea, Malaysia and others. In addition, general incentives are offered to all companies who chose to apply for them. These include customs duty concessions, VAT refunds, withholding tax concessions, accelerated depreciation, carry forward of losses, among others.
Mineral Sector Taxes
Mineral sector investors wishing to invest in Fiji can apply for industry-specific tax concessions and exemptions from the Government of Fiji under the auspices of the Income Tax Act (Cap. 201) and the Customs Tariffs Act, 1986. The major elements of the fiscal package include the following:
Royalty Tax - Royalties are levied on the Free-On-Board (FOB) value. The rates are: 3% on bauxite or iron ore, and 5% on all other minerals. Under certain circumstances, mining companies with marginal projects, that are bordering on viable, can apply for a reduced rate for the initial debt repayment period, if it can be proved necessary to achieve mine viability.
Export tax - Export tax is payable at a rate of 3% of FOB value of gold. Government policy is to ensure that the sum of Royalty plus export tax does not exceed 5% of FOB value. A review of fiscal incentives for the mining sector is presently underway.
Customs Duties - Government proposes to introduce a low standard import duty that will be levied according to the Customs Tariffs Act. Where that duty is payable on primary or intermediate inputs into commodities or products that are exported, the duty will be refunded. Until this policy is implemented, mining companies will continue to pay import duties (fiscal duty) at varying rates on most goods required for a mining venture.
Import duty of 5% is payable on imports of initial capital equipment including specialised equipment and machinery; specialised spares for heavy equipment and machinery; and chemicals used in the mining process. For imports of fuel for power generation the rate is 10 cents per litre.
Investors can apply to the Comptroller of Customs for customs duty concessions, such as: remission or reduction in duty paid for goods imported into Fiji (including imported machinery and equipment, parts and materials) which will be of benefit to the country or if they will be used to promote economic development or develop Fiji's industry.
VAT - VAT is payable at 12.5%. For businesses which export more than 80% of their product, the VAT of 12.5% is usually fully refundable.
Depreciation - a mining company incurring capital expenditure within Fiji in the acquisition of a mining lease or in the development of mines for the extraction, treatment, refinement and sale of minerals may, as an alternative to normal depreciation, apply for accelerated depreciation on buildings, plant and machinery in any 5 out of 8 years .
Dividend, Interest, Know-How and Royalty Withholding Taxes - All Withholding Taxes are assessed in accordance with Fiji's general tax laws, however concessionary withholding tax rates of 10-20% for interest, dividends, and royalties, are available for treaty countries. Taxpayers may apply to the Minister of Finance for reduction or exemption from dividend, interest or royalty withholding taxes where such reduction/exemption is considered to benefit Fiji's economy.