foreword Jon Hills PKF (UK) LLP Chairman, PKF International Tax Committee PKF Worldwide Tax Guide 2012

Transcription

1 Fiji Tax Guide 2012

2 foreword A country s tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. This handy reference guide provides clients and professional practitioners with comprehensive tax and business information for 100 countries throughout the world. As you will appreciate, the production of the WWTG is a huge team effort and I would like to thank all tax experts within PFK member firms who gave up their time to contribute the vital information on their country s taxes that forms the heart of this publication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF Witt Mares, and Kaarji Vaughan, PKF Melbourne for co-ordinating and checking the entries from countries within their regions. The WWTG continues to expand each year reflecting both the growth of the PKF network and the strength of the tax capability offered by member firms throughout the world. I hope that the combination of the WWTG and assistance from your local PKF member firm will provide you with the advice you need to make the right decisions for your international business. Jon Hills PKF (UK) LLP Chairman, PKF International Tax Committee jon.hills@uk.pkf.com I

3 important disclaimer This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International is a network of legally independent member firms administered by PKF International Limited (PKFI). Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions on the part of any individual member firm or firms. II

4 preface The (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of 100 of the world s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current as of 30 September 2011, while also noting imminent changes where necessary. On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country s personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. In addition to the printed version of the WWTG, individual country taxation guides are available in PDF format which can be downloaded from the PKF website at PKF INTERNATIONAL LIMITED APRIL 2012 PKF INTERNATIONAL LIMITED ALL RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION III

5 about pkf international limited PKF International Limited (PKFI) administers the PKF network of legally independent member firms. There are around 300 member firms and correspondents in 440 locations in around 125 countries providing accounting and business advisory services. PKFI member firms employ around 2,200 partners and more than 21,400 staff. PKFI is the 10th largest global accountancy network and its member firms have $2.6 billion aggregate fee income (year end June 2011). The network is a member of the Forum of Firms, an organisation dedicated to consistent and high quality standards of financial reporting and auditing practices worldwide. Services provided by member firms include: Assurance & Advisory Corporate Finance Financial Planning Forensic Accounting Hotel Consultancy Insolvency Corporate & Personal IT Consultancy Management Consultancy Taxation PKF member firms are organised into five geographical regions covering Africa; Latin America; Asia Pacific; Europe, the Middle East & India (EMEI); and North America & the Caribbean. Each region elects representatives to the board of PKF International Limited which administers the network. While the member firms remain separate and independent, international tax, corporate finance, professional standards, audit, hotel consultancy, insolvency and business development committees work together to improve quality standards, develop initiatives and share knowledge and best practice cross the network. Please visit for more information. IV

6 structure of country descriptions a. taxes payable FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX/VALUE ADDED TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES b. determination of taxable income CAPITAL ALLOWANCES DEPRECIATION STOCK/INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCED INCOME INCENTIVES c. foreign tax relief d. corporate Groups e. related party transactions f. withholding tax G. exchange control H. personal tax i. treaty and non-treaty withholding tax rates V

7 international time Zones AT 12 NOON, GREENwICH MEAN TIME, THE standard TIME ELsEwHERE Is: A Algeria pm Angola pm Argentina am Australia - Melbourne pm Sydney pm Adelaide pm Perth pm Austria pm B Bahamas am Bahrain pm Belgium pm Belize am Bermuda am Brazil am British Virgin Islands am C Canada - Toronto am Winnipeg am Calgary am Vancouver am Cayman Islands am Chile am China - Beijing pm Colombia am Croatia pm Cyprus pm Czech Republic pm D Denmark pm Dominican Republic am E Ecuador am Egypt pm El Salvador am Estonia pm F Fiji midnight Finland pm France pm Guernsey noon Guyana am H Hong Kong pm Hungary pm I India pm Indonesia pm Ireland noon Isle of Man noon Israel pm Italy pm J Jamaica am Japan pm Jersey noon Jordan pm K Kazakhstan pm Kenya pm Korea pm Kuwait pm L Latvia pm Lebanon pm Liberia noon Luxembourg pm M Malaysia pm Malta pm Mauritius pm Mexico am Morocco noon N Namibia pm Netherlands (The) pm New Zealand midnight Nigeria pm Norway pm O Oman pm G Gambia (The) noon Georgia pm Germany pm Ghana noon Greece pm Grenada am Guatemala am P Panama am Papua New Guinea pm Peru am Philippines pm Poland pm Portugal pm Puerto Rico am VI

8 Q Qatar am R Romania pm Russia - Moscow pm St Petersburg pm s Sierra Leone noon Singapore pm Slovak Republic pm Slovenia pm South Africa pm Spain pm Sweden pm Switzerland pm T Taiwan pm Thailand pm Tunisia noon Turkey pm Turks and Caicos Islands am U Uganda pm Ukraine pm United Arab Emirates pm United Kingdom (GMT) 12 noon United States of America - New York City am Washington, D.C am Chicago am Houston am Denver am Los Angeles am San Francisco am Uruguay am V Venezuela am Vietnam pm VII

9 Fiji fiji Currency: Fiji Dollar Dial Code To: 679 Dial Code Out: 00 Member Firm: City: Name: Contact Information: Suva Pradeep Patel / a. taxes payable NATIONAL TAxEs AND LEVIEs COMPANy TAx Company tax is payable by Fiji resident companies on taxable income derived from all sources. Non-resident companies are required to pay the tax on income sourced in Fiji. Resident companies are those that are incorporated in Fiji or carry on business in Fiji and have either practical management and control in Fiji or voting power controlled by shareholders who are Fiji residents. The resident company tax rate is 20% for all companies. This is effective for the tax year 2012 and thereafter. The tax rate of 20% is also applicable to branches of foreign companies and insurance companies. The tax year usually runs from 1 January to 31 December although alternative fiscal years are permitted. A company is required to make advance company tax payments in four instalments. Three instalments of 30% of estimated tax liability each are required to be paid by the last day of the 6th, 9th and 12th month of the fiscal year, and the balance by last day of the 2nd month following the end of the fiscal year. CAPITAL GAINs TAx A Capital Gains Tax (CGT) regime has been introduced with effect from 1 May CGT is charged at the rate of 10%. However, where a capital asset was bought for the sole purpose of resale or as part of a profit-making scheme, any profits or gains are treated as taxable company income, and subject to income tax at the corporate tax rate. BRANCH PROFITs TAx Where a branch of a foreign company operates in Fiji, the profits of the branch are subject to Fiji corporate tax at the following rates: Non-resident shipping companies 2% Other non-resident companies carrying on business in Fiji (e.g. branch profits) 20% sales TAx/VALUE ADDED TAx (VAT) There is no sales tax in Fiji although there is excise duty payable by manufacturers on sales of certain products such as alcohol, tobacco and carbonated drinks. VAT is charged at a rate of 15% on most goods and services in Fiji; the exceptions being certain exempt items such as financial services, residential dwellings, educational services, and certain zero rated items such as goods and services exported and certain basic food items. service TURNOVER TAx Service Turnover Tax is charged at the rate of 5% and is applicable on hotel turnover and a wide range of tourism related services and recreational activities. FRINGE BENEFITs TAx A new tax regime, known as Fringe Benefits Tax (FBT), has been introduced with effect from 1 January 2012 at a rate of 20%. FBT is payable on the value of in-kind or non-cash benefits that the employer or associate of the employer provides to their employees. FBT is payable by the employer or the associate of the employer. FBT is calculated at the rate of 20% on a gross-up value basis. The FBT regime outlines special valuation rules for all categories of fringe benefits. The FBT regime provides a number of fringe benefits that are subject to FBT, including debt waiver, household personnel, housing, loan, meal or refreshment, motor vehicle, private expenditure, property and residual fringe benefits. 1

10 Fiji stamp DUTy Stamp duty is imposed on transfers of shares, transfers of properties, agreements, mortgages, partnership agreements, short term insurance policies, etc. OTHER TAxEs These include import customs duty, import excise duty and excise duty on certain manufactured products (alcohol, tobacco). b. determination of taxable income Taxable income of a company is determined by ascertaining assessable income less allowable deductions. Generally, expenditure and/or losses are deductible provided they are incurred in gaining or producing assessable income. Items of a capital or domestic nature are non-deductible. DEPRECIATION Assets are subject to broad banded depreciation rates from 2.5% to 50%. The effective life of the asset is used to determine the depreciation rate. A loading of 20% can be applied to the broad banded rates. New buildings constructed before 31 December 2014 qualify for an accelerated depreciation allowance at the rate of 20%. A tax deduction at the rate of 100% is available by way of accelerated depreciation for new plant and machinery used for manufacturing purposes. stocks/inventory Trading stock on hand at the beginning and the end of each income year must be taken into account in determining assessable income. The closing value adopted becomes the opening value at the beginning of the following year. The taxpayer has the option to value stock at cost or the lower of cost or net realisable value. Valuation methods include FIFO and average cost. INTEREsT DEDUCTIONs Interest is deductible where it is incurred in gaining or producing assessable income. HEAD OFFICE ExPENsEs Deductions for head office charges or similar payments are restricted to 3% of total gross Fiji Income. TAx LOssEs Tax losses incurred during the 2012 tax year or thereafter are allowed to be carried forward for 4 years provided there is continuity of at least 51% ownership or there is no substantial change in the nature of the business. Tax losses incurred prior to 1 January 2012 cease to continue from 1 January Accordingly, all tax losses as at 31 December 2011 are not available for carry forward. Loss carry-back and inter-group company transfers are not permitted. FOREIGN sourced INCOME Resident corporations are taxed on their worldwide income. Income derived from a treaty country is taxed in Fiji, subject to treaty provisions. INCENTIVEs Specific deductions and concessions are available for certain industries and business sectors such as mining, hotel and tourism related industry, film making and audio-visual industry, ICT industry, manufacturing, fisheries, agriculture, food processing and forestry. An income tax exemption is available to certain small and micro enterprises with turnover of less than $300,000. Generous income tax and other incentives, which includes an income tax exemption for 7 to 12 years, special depreciation allowance and duty concessions, are available to approved major hotel developments. An accelerated write-off at the rate of 20% on construction of new buildings is available until 31 December 2014 subject to certain requirements. A tax deduction at the rate of 100% is available by way of accelerated depreciation for new plant and machinery used for manufacturing purposes. Generous income tax and other incentives, including a tax holiday period, are available for the ICT industry. Furthermore, an attractive tax incentive package is available for qualifying industries established on the island of Vanua Levu and other remote islands. Profits from qualifying exports are eligible for certain exemptions from income tax. 2

11 Fiji c. foreign tax relief A credit is allowed for tax paid in another country on foreign income, limited to the lesser of the Fiji or overseas tax payable on such income. d. corporate Groups Group taxation is not permitted. e. related party transactions All related party transactions are required to be undertaken for arm s-length (market) consideration. Fiji has specific transfer pricing provisions and anti-avoidance provisions within the Income Tax Act. f. withholding tax Non-resident withholding tax is deducted from interest, dividends, management fees, know-how fees and royalties paid to non-residents. Withholding tax is levied subject to tax treaty provisions. Dividend withholding tax is not payable to the extent such dividends are paid out of tax-paid company profits. G. exchange control Overseas remittances in and out of Fiji, including repatriation of capital and remittance of profits, dividends, interest and loan repayments, generally require prior approval of the Reserve Bank of Fiji. Currently, there are certain restrictions on repatriation of capital and remittance of profits and dividends. Non-resident controlled entities are subject to certain borrowing restrictions. H. personal tax Income tax is payable by Fiji residents on their worldwide income. Non-resident individuals pay tax on Fiji-sourced income only. Residence is determined with reference to domicile, place of fixed abode and length of time in Fiji. Income tax is payable on assessable income less allowable deductions. Assessable income includes employment income, business income, rents, interest and dividends. Deductions are allowable for expenditure incurred in earning assessable income (self-employed income/business profits) with limited deductions against employment income. Also limited personal allowances are available. Employment-related earnings have tax deductions at source. Self-employed individuals and those with non-salary/wage income are required to pay provisional tax in three instalments based on the previous year s tax liability. The individual tax rates for the year ending 31 December 2012 are as follows: The resident individual income tax and Social Responsibility Levy (SRL) structure is as follows: Resident individuals Chargeable income ($) Income Tax Payable ($) social Responsibility Levy (Refer Note) 0 15,600 Nil 15,601 22,000 7% of excess over 15,600 22,001 50, % of excess over 22,000 50, ,000 5, % of excess over 50, , ,000 49, % of excess over 270,000 23% 300, ,000 55, % of excess over 300,000 24% 350, ,000 65, % of excess over 350,000 25% 400, ,000 75, % of excess over 400,000 26% 3

12 Fiji 450, ,000 85, % of excess over 450,000 27% 500, 001 1,000,000 95, % of excess over 500,000 28% 1,000, , % of excess over 1,000,000 29% Note: SRL is applicable on the total chargeable (taxable) income in addition to income tax at the rate applicable to the respective income band The non-resident individual income tax and Social Responsibility Levy (SRL) structure is as follows: Non-resident individuals Chargeable income ($) Income Tax Payable ($) social Responsibility Levy (Refer Note) 0 15,600 20% of excess of $0 19% 15,601 22,000 3, % of excess over 15,600 20% 22,001 50,000 4, % of excess over 22,000 21% 50, ,000 10, % of excess over 50,000 22% 270, ,000 54, % of excess over 270,000 23% 300, ,000 60, % of excess over 300,000 24% 350, ,000 70, % of excess over 350,000 25% 400, ,000 80, % of excess over 400,000 26% 450, ,000 90, % of excess over 450,000 27% 500, 001 1,000, , % of excess over 500,000 28% 1,000, , % of excess over 1,000,000 29% Note: SRL is applicable on the total chargeable (taxable) income in addition to income tax at the rate applicable to the respective income band i. treaty and non-treaty withholding taxes Dividends (%) Interest (%) Royalties (%) Know-how, management charges and others (%) Non resident corporations and individuals: Non-Treaty Countries: Treaty Countries: Australia Japan Korea, Republic of Malaysia New Zealand Papua New Guinea Singapore United Kingdom Dividend withholding tax is not payable to the extent that such dividend is paid out of tax-paid company profits. Withholding tax is levied subject to tax treaty provision. finland Currency: Euro Dial Code To: 358 Dial Code Out: 990 (EUR) 4

13 $