Some businesses risk failing to pass on the VAT reduction to consumers, threatening to undermine government efforts to ease the cost of living.

Finance Minister and Deputy Prime Minister Professor Biman Prasad has issued a strong warning that from today, August 1, the VAT rate will be lowered from 15 percent to 12.5 percent.

He stressed that all businesses are legally required to charge the new rate and must not keep the difference as extra profit but pass the full relief to customers.

“Consumer Council has come out already and said that some businesses have tried to increase prices, my message to all those is, please don’t, this is, they can take it as a warning, we will be looking at how we can ensure that they pass on the, and I think there are a lot of honest, good businesses out there who want to comply, who want to pass on the relief that we are giving to the people.”

To enforce this, Prof Prasad states that a multi-agency task force made up of the Fiji Revenue and Customs Service (FRCS), Consumer Council, Fiji Commerce and Employers Federation (FCEC), and the Ministry of Finance will monitor prices closely.

The Consumer Council has already reported cases where some businesses have attempted to raise prices despite the VAT cut, a move the government has vowed to treat seriously.

Prof Prasad emphasized that when the government puts policies in place to provide relief to the public, it is not only a moral responsibility but a legal obligation for businesses to comply.

He acknowledged that businesses are entitled to make a profit but insisted that charging more than the new VAT rate is unacceptable.

He explained the government’s efforts through recent budgets which have successfully lowered inflation and created fiscal space to support the people.

The 2025-2026 budget, he said, has been well received across society and is expected to boost economic growth, consumer confidence, and investment.

The Minister also pointed to ongoing government focus on law and order and drug issues as factors that enhance overall confidence in the country’s future.

With the VAT reduction taking effect tomorrow, Prasad’s message to businesses is clear and that is to comply fully and pass on the relief to the public or face action from authorities.

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