Budget tax outlook
June 29, 2017 9:42 am
Personal Income Tax
From the many highlights of the budget, the tax reforms is one that’s stands out.
Fijian earning below $30,000 will no longer incur personal income tax.
This, after the minimum income tax threshold has been increased from $16,000 to $30,000.
This initiative has been implemented in order to assist in relieving the burden on taxpayers.
This tax changes is also aimed at increasing consumer spending.
Environment and Climate Change Adaptation levy
Also on tax, the Environmental Levy now known as the Environment and Climate Adaptation levy will directly fund environmental protection and climate adaptation projects.
This levy has been increased from six percent to ten percent.
The ECAL will also be apply to the purchase of luxury cars with engine sizes greater than 3000 cylinder capacity.
However, this levy will not apply to public transport including taxis.
Newly introduced is the plastic bag levy of 10 cents which will be charged per plastic bag.
This effort is in bid to reduce plastic waste and usage. It will be applicable to all businesses and will be rolled out in phases.
As for the much talked about Service Turnover Tax, that has been reduced from ten percent to six percent.
This, to reduce the tax burden for visiting tourist.
The port on Denarau has been declared as a port of entry for yachts to better facilitate entry clearances on site.
All menus at hotels, must display tax inclusive price of goods to give customers accurate information on purchase.
A penalty rate will be increased to combat non-compliant behaviours.
The zero fiscal and import excise duties on the importation of new hybrid motor vehicle will continue.
In order to reduce tax burden on taxi operators, a fiscal importation duty on secondhand hybrid cars for taxi businesses has been reduced to half.
However, this incentive will only apply to taxi operators who have only one taxi.
Also the importation of new non-hybrid vehicles suitable for taxi operations will attract a five percent fiscal import duty and zero import excise.
Fiscal import duty on new parts inclusive of new engines for motor vehicles is reduced from fifteen percent to five percent.
Import duty on batteries and cells used for hybrid vehicles is reduced from thirty-two percent to five percent.
This import duty is active for a period of two years.
As for bus duties, a fiscal import and excise duty on the importation of new buses has been reduced to zero for a period of two years.
A import duty of five percent and zero import excise duty will be implemented on used buses.
Both these buses must need to have a capacity of sixteen people or more.
Government has reformed the duty regime for inter-island passenger and cargo vessel operators to decrease the cost of importing new and used vessels.
The importation of all new and used vessels is now duty free for two years.
In terms on of road construction incentives, a five percent tax will be imposed on the exportation of rock, gravel and aggregates.
Also to reduce wear and tear of road networking, a vehicle exceeding 20 tons of gross weight will be banned.
Health tax measures
Employers who provide health/medical insurance will be exempt from Fringe Benefit Taxes.
All items imported for health promotion programs are exempt from fiscal import and excise duty.
The fiscal import duty on energy bar, baby cots and baby shoes will reduce from thirty-two percent to five percent.
Import duty on ready-made towels is reduced from thirty-two to fifteen percent.
While fiscal import duty on baby wipes is reduced from thirty-two percent to zero percent.
The excise tax on cigarettes, tobacco and alcohol will increase by fifteen percent.
Sweetened and carbonated drinks has attracted excise tax of fifteen percent.
This is rising from thirty cents per litter to thirty-five cents per liter.
A fiscal import duty on fabricated steel structures is reduced from thirty-two to five percent.
Duty will be reduced from thirty-two percent to fifteen percent on electrical cables.
Glues, epoxies, sealer, protective coatings, polishes, creams, steel and aluminum louver frames will now have an import duty of five percent.
Primary Industry Tax
Fish supplied to PAFCO will be VAT zero-related and suppliers will be accorded an Export Income Deduction incentive.
Also all vessels that engage in the transshipment of fish pay the Fish Levy of $450 per tonne.
The threshold for Water Resource Tax has been increased from 3,500,000 liters per month to 9,999,999 liters per month.
Sports and Major Events
A reduction in the importation of sports-related goods will also be implemented.
There will be no duty charged on importing items used for hosting international sporting tournaments.
Concessions will be applied on tracksuits and jumpers for athletes competing on the national team.
Tax regime and administration
The stamp duty payments are eliminated on property transferred through family transactions (love and affection).
This is consistent with the Capital Gains Tax exemption.
The resident tax of three percent and non-resident tax of nine percent has been removed. This would mean all dividend income is exempt from tax.
In order to strengthen tax compliance the amnesty of no tax and penalties granted for the declaration of foreign assets and income has been renewed.
The period will now last from 30 June to 31 December, 2017.
Reforms have been implemented to simplify tax administration.
As of August 1st, the Fiji Revenue and Customs Authority will be renamed to the Fiji Revenue and Customs Service.
This is in effect to reflect the organization’s institutional values shift towards improving customer service delivery.
With the increased number of cases against tax agents, the Fiji Revenue and Customs Service, chief executive will administer the Code of Conduct for Tax Practitioners.
This would result regular board meetings and streamlined decision making.
As for other reduction in tax, Fijians can enjoy a reduced import duty from thirty-two percent to fifteen percent on canned sardines.