[Source: File Photo]

The government has announced that effective April 1, zero-rated VAT will apply to 21 basic consumer items.

Minister for Economy, Aiyaz Zaiyed-Khaiyum made the announcement while delivering the 2021–2022 revised budget.

Sugar, flour, rice, canned fish, cooking oil, potato, onion, garlic, baby milk, powdered milk, liquid milk, dhal, tea, salt, soap, soap powder, toilet paper, sanitary pads, toothpaste, kerosene, and cooking gas are among the items on the list.

He says the government has decided to take this tough decision to cushion the impact of higher global prices on Fijian consumers.

He says the government expects to lose around $163 million in tax revenues from zero-rating these goods.

However, the government will raise VAT on 21 non-essential items to 15 percent.

The Minister says the increase in VAT will cover goods and services that previously attracted ECAL such as prescribed services, white goods, and certain motor vehicles, and will apply in turn over in access of $100,000.

Sayed-Khaiyum made it very clear that ECAL will be removed and replaced by the adjusted VAT rate of 15 percent for these items.

He says this will mean that tax on an item that carries 9 percent VAT and 5 percent ECAL would increase by 1 percent.

“The additional lists of goods and services to be taxed at 15 percent VAT now will include alcohol, tobacco, textiles, clothing and footwear, perfumes, jewellery, watches, stereos, and sound systems and other electrical equipment and professional services such as legal, accounting, management and consultancy, architectural engineering, scientific research and management, advertising and market research, and other professional scientific and technical activities.”

The Minister says the ECAL on plastics and superyachts will be removed and replaced by the plastic and super-yachts levy at the same rates.

He says a portion of VAT return charged on prescribed services will now be directed towards the environment and climate adaptation projects that were previously funded by ECAL through the trust funds.