Fiji: Tax measures in 2020-2021 budget

Fiji: Tax measures in 2020-2021 budget

Tax measures in the 2020-2021 budget include extensions of certain relief measures that were provided in response to the coronavirus (COVID-19) pandemic.

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Among the income tax-related relief provisions are items that:

  • Increase the thin capitalization debt-to-equity ratio from 2:1 to 3:1
  • Make permanent the 100% write-off on the purchase of fixed assets (up to $10,000*) used for business purposes
  • Make permanent the 100% write-off on the construction of a new commercial and industrial building and no longer require prior approvals
  • Extend a tax deduction for landlords that grants a reduction of commercial rent (for the period 1 April 2020 through 31 December 2021)
  • Make permanent the ability to remit advance tax payments in nine installments
  • Continue penalty-waiver relief for a three-year period
  • Extend an income tax exemption for debt forgiveness (for debts forgiven during the period 1 April 2020 through 31 December 2021)
  • Introduce new medical investment incentives
  • Allow the fringe benefits tax to be deductible for tax purposes

*$=Fijian dollar ($1 is approximately U.S. $0.50)

Other measures in the budget concern indirect tax, including provisions that:

  • Repeal of the service turnover tax (previously imposed at a rate of 6%)
  • Reduce the rate of the environmental and climate adaptation levy (ECAL) to 5% (from 10%)
  • Increase the ECAL turnover threshold increased to $3 million (from $1.25 million)
  • Further delay of the value added tax (VAT) monitoring system to 1 January 2022
  • Repeal the VAT reverse-charge mechanism on supplies received from abroad
  • Allow a VAT exemption for the supply of residential accommodation

Read a 2020 report [PDF 720 KB] prepared by the KPMG member firm in Fiji

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