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Home and Essential Contacts A Leading Light in Pacific Mining A Young Geological Environment Base and Precious Metal Mineralisation Fiscal Aspects |
Fiji: Fiscal Aspects The Government's fiscal package applicable to exploration and mining companies contains an internationally competitive set of interrelated measures that achieves the dual goals of investment promotion and equitable returns to the people of Fiji under a variety of market circumstances. It also reflects the government's wish to reconcile national taxation policy with the special needs and characteristics of the mining sector. Within the general economy, there are various customs and tax incentives offered to exporting companies. These measures include customs duty concessions, Value Added Tax (VAT) refunds, withholding tax concessions, accelerated depreciation and the ability to carry losses forward, amongst other benefits. Fiji also has double-taxation treaties with countries that include Australia, Japan, New Zealand, the UK, South Korea, Malaysia and others. There is no separate mineral tax policy, although special features of mineral development projects, such as their capital- and debt-intensiveness, long lead times and the cyclical nature of mineral markets, have been addressed in framing the general tax package. Thus, companies involved in mineral sector projects in Fiji can apply for industry-specific tax concessions and exemptions. For example, mining companies currently pay concessionary rates of customs duty (5%) and VAT (10%) on imports of capital equipment, specialised spares and chemicals used in the mining process, as well as lower duties on fuel used for power generation. These concessions are under review, with the intention of introducing a low-rate, standard import duty which would be refunded to companies that are major exporters. The government is also in the process of reviewing company taxation in an IMF-backed reform package scheduled for implementation over the next two years. The first changes involved in introducing the country's new, internationally competitive tax structure will be announced later this year. Existing corporate tax rates are 35% for resident companies and 45% for non-residents. Concessions that may be available to exploration and mining companies under the existing tax structure are:
As a non-tax incentive, the government will often consider negotiating the provision of general infrastructure with mining companies, where benefits will accrue to the public at large. This is conditional on an exploration project being at an advanced stage, and the company being able to give a firm commitment to proceed with development as quickly as possible.
Royalties are levied on mineral production, in a dual system that encompasses both royalties to landowners and an export tax to the government. The combined amount does not exceed 5% of the fob value of the commodity, but the components may be commodity-specific. Thus, for example, bauxite and iron ore attract a royalty of 3%, as opposed to a rate of up to 5% on other minerals. An export tax of 3% is payable on the fob value of gold and silver. Fiji benefits from its membership of several international trade assistance programmes. Companies exporting certain types of products have preferential access to Australian and New Zealand markets through the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), to European Union markets under the Lome agreements, and to Japan. Industrial development policies are geared towards export markets, and any suitable projects will be welcomed provided that they satisfy established criteria relating to employment, generation of foreign exchange and national development. © Mining Journal 1998 Designed and produced by angelcom, London.
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