Summary of 2012 Budget Revenue Policies

2012 BUDGET REVENUE POLICIES – TAX AND CUSTOMS
Summary of 2012 Budget Revenue Policies

INCOME TAX ACT (ITA)
 Corporate Tax Rate
- The corporate tax rate will be reduced from 28% to 20%.
 PAYE Tax Rates
- Income tax threshold will be increased from $15,000 to $15,600
- The marginal income tax rate for lower band will be reduced from 25% to 7%; the rate for middle
income tax band will be reduced from 31% to 18%, and the income tax marginal rate for the top band
will be reduced from 31% to 20% in line with the corporate tax rate
- A Social Responsibility Levy will be applied on full chargeable income, starting at 23% for income tax
band $270,001 to $300,000

- The levy rate will increase by 1% for every income tax band thereafter.
Chargeable Income ($) Tax Payable ($) Levy
0-15,600 Nil
15,601 – 22,000 7% of excess over $15,600
22,001– 50,000 448 +18% of excess over $22,000
50,001 – 270,000 5488 +20% of excess over $50,000
270,001 - 300,000 49, 488 + 20% of excess over $270,000 23%
300,001 - 350,000 55, 487 +20% of excess over $300,000 24%
350,001 - 400,000 $65, 487 + 20% of excess over $350,000 25%
400,001 - 450,000 $75, 487 + 20% of excess over $400,000 26%
450,001 – 500,000 $85, 487+ 20% of excess over $450,000 27%
500, 001 – 1,000,000 $95, 487 + 20% of excess over $500,000 28%
1,000,001 + $195, 486 + 20% of excess over $1,000,000 29%
 South Pacific Stock Exchange (SPSE) Incentives
- The 40 percent local equity requirement for foreign incorporated companies listed on the SPSE will be
removed.

 Accelerated Depreciation
- This incentive will be extended to 2014.
 40% Investment Allowance
- A 40% Investment Allowance (excluding cost of labor) for extension and renovation expenses will be
introduced with a minimum qualifying capital expenditure of $50,000. This will only be made available
to existing businesses in Vanua Levu.
 Advance Company Tax
- Effective from 2012, advance payment of tax by companies will be increased from 33% to 90% by the
end of the current fiscal year.
- 30% to be paid in June; 30% to be paid in September; and 30% to be paid in December, while the
remaining 10% is to be paid in February the following year.
 Removal of Housing Interest Allowance
- The $400 interest allowance on housing normally deductable under the PAYE tax computation will be
removed.
 Tax Deduction on FNPF Employer Contribution
- Tax deduction to Employers for Employee FNPF contributions only be allowable up to 50%.
 Carried Forward of Business Losses
- All carried forward of losses to be reduced to 4 years.
 Fringe Benefits Tax
- A new fringe benefit tax regime will be introduced at a rate of 20% in 2012.
- Employers will be responsible for paying and remitting to FRCA the relevant amount.
 Transfer Pricing
- Section 34 of the ITA to be amended to provide for the introduction of the Income Tax (Transfer
Pricing) Regulations in 2012.
 Buying and Selling of Shares for Properties in Fiji
- A foreign company which owns land or assets in Fiji cannot transfer ownership of the subject land or
assets by way of sale of shares unless sale of those shares are approved by FRCA.
OTHER TAXES
 Hotel Turnover Tax (HTT)
- The Hotel Turnover Tax(HTT) will be renamed as Service Turnover Tax (STT)
- The new STT will also apply to other tourism related services:
 rental car operators;
 in-bound tour operators;
 events management operators;
 recreation, entertainment and cinema operators;

 bars and night-clubs;
 bistros, coffee shops & restaurants with annual gross turnover of $1.5 million and above;
 All water sports, underwater activities, skydiving, hot air balloon rides, river safaris, aircraft charter or
hire, including helicopters with annual gross turnover in excess of $300,000; and
 home stay operators.
 Departure Tax
- The departure tax will be increased from $100 to $150.
VALUE ADDED TAX DECREE
 Value Added Tax (VAT) Threshold
- For registration purposes, VAT threshold will increase from $50,000 to $100,000.
 Small and Micro Enterprises (SME)
- SMEs will be required to lodge only one VAT return in a year.
- This will be applicable only to entities with gross annual turnover of $300,000 and below.
 VAT Dwelling House
- Reinstate repealed Section 70(2) of the VAT Decree to effect the re-introduction of VAT dwelling house
claims
- The expenditure threshold for VAT dwelling house is $120,000 is applicable.
- This includes construction of first time residential housing and excludes renovations.
 VAT Refund
- FRCA and Ministry of Finance to expedite payment of VAT refunds.
 
CUSTOMS TARIFF ACT (CTA)Items Fiscal Duty
1. Canned Fish  Increase Fiscal Duty from 15% to 32%.
2. Electrical Mounting Blocks  Increase Fiscal Duty from 5% to 15%.
3. Exercise Books  Increase Fiscal Duty from 15% to 32%.
4. Imported cigarettes and alcohol  Increase Fiscal Duty by 3%.
5. Blank DVDs and CDs  Introduce a specific duty rate of $1 on blank CDs &DVDs.
6. Palm Oil  Increase Fiscal Duty from 15% to 32%.
7. Mono Sodium Glutamate  Increase Fiscal Duty from 5% to 32%

Items Fiscal Duty
8. Machinery used in the
manufacture of goods
 Reduce Fiscal Duty to 0%.
9. Knitted fabrics  Reduce Fiscal Duty from 32% to 5%.
10. New road tractors for semi
trailers of heading 8701 and
trailers of heading 8716
 Reduce Fiscal Duty from 32% to 5% excluding agricultural
tractors, which is 0%;
 Includes prime-movers; and
 Self loading and other trailers for transport of goods.
11. New trucks (goods vehicles) of
gross vehicle weight exceeding
3 tonnes
 Reduce Fiscal Duty from 32% to 5%.
12. New special type vehicles of
heading 8705
 Reduce Fiscal Duty from 32% to 5%.
13. Fruits and Vegetables not grown
or produced in Fiji
 Reduce Fiscal Duty from 32% to 5%
14. Raw materials
(Manufacturers outside of Viti
Levu)
 Reduce Fiscal Duty on raw materials to 0% for all
manufacturers based outside of Viti Levu.
15. Chicken mesh hexagonal wire
netting
 Reduce Fiscal Duty from 32% to 5%.
16. Musical Instruments  Reduce Fiscal Duty from 5% to 0%.
17. Sports Equipment under
heading 9506
 Reduce Fiscal Duty from 5% to 0%.
 This includes energy supplements-beverages in liquid and
powder form.
18. Agricultural Inputs  Reduce Fiscal Duty to 0%.
 Seeds of a kind for sowing of heading 12.09, insecticides,
rodenticides, fungicides, herbicides, anti-sprouting products
and plant-growth regulators, pure-bred breeding animals
falling under heading 0101, 0102, 0103 and 0104.
Table 2: 2012 Import Excise Changes
Policy Description
1. New trucks (goods vehicles) of
gross vehicle weight exceeding 3
tonnes
 Reduce Import Excise Duty from 15% to 5%
2. Musical Instruments  Reduce Import Excise from 10% to 0%.
3. Nails  Impose 10% Import Excise.
4. Nylon ropes  Impose 15% Import Excise.
2012 BUDGET REVENUE POLICIES – TAX AND CUSTOMS
Summary of 2012 Budget Revenue Policies Page 5
Table 3: 2012 Local Excise Changes
POLICY DESCRIPTION
1. Cigarettes, tobacco and alcohol  Increase current excise duty by 3%.
Table 4: 2012 Excise Rates
DESCRIPTION 2011 RATES 2012 RATES
Ale, Beer, Stout and other fermented liquors of
an alcoholic strength of 3% or less $1.39/litre $1.43/litre
Ale, Beer, Stout and other fermented liquors of
an alcoholic strength of 3% or more $1.62/litre $1.67/litre
Potable Spirit Not Exceeding 57.12 GL $30.54/litre $31.46/litre
Potable Spirit Exceeding 57.12 GL $53.49/litre $55.09/litre
Wine: Still
Sparkling
$2.16/litre
$2.46/litre
$2.22/litre
$2.53/litre
Other fermented beverages:
Still
Sparkling
$2.16/litre
$2.46/litre
$2.22/litre
$2.53/litre
Ready to Drink Mixtures of Any Alcoholic
Beverages of any Alcoholic Strength by volume
of 11.49% or less
$1.00/litre $1.03/litre
Cigarettes from local tobacco per 10 sticks 93.86 cents 96.68 cents
Cigarette from imported tobacco per 10 sticks 140.81 cents 145.03 cents
Manufactured tobacco containing tobacco
grown outside Fiji $81.13/kg $83.56/kg
Manufactured tobacco containing tobacco
grown in Fiji $47.66/kg $49.09/kg
Manufactured tobacco containing tobacco
grown in foreign and tobacco grown in Fiji:
Foreign portion
Local portion
$81.13/kg
$47.66/kg
$83.56/kg
$49.09/kg
Table 5: Amendments to Part II of the Customs Tariff Act
Policy Description
1. Code 117(ii)
[Knitted fabric accepted by the
Comptroller as not being
manufactured in Fiji to a specification
which he considers reasonable
(Heading 3002, 6003, 6004, 6005 and
6006)]
 Delete the content of Code 117(ii) in line with
reduction in fiscal duty from 32% to 5% for knitted
fabrics
Table 6: Amendments to Part III of the Customs Tariff Act
Policy Description
1. Creation of codes in Part III of the Tariff  Creation of codes in Part III of the Tariff to
accommodate certain goods currently approved under
Section 10 - existing requirements and qualifying
conditions will apply.
OTHER CUSTOMS CHANGES
Table 7: Legislative Changes
Policy Description
1. Garnishee Bank Accounts for Duty
owed
 To recover duty owed, a garnishee order will be issued
on the Importer’s bank account or joint account,
provided the source of income in joint account is
determined to be the income of the Importer only and
not the other party to the joint account.

CHANGES TO SECTION 10 CONCESSIONS

POLICY DESCRIPTION
1. Palm Oil  Remove Section 10 concession
2. Styrofoam lunch boxes  Remove Section 10 concession
3. Tubes, bulbs used for motor vehicles,
torches and flash lights
 Remove Section 10 concession
4. Duty rate on agricultural machinery
and equipment
 Agriculture & Dairy - Duty free concession on all
specialised agricultural machinery and equipment and
other agriculture-related inputs.
5. Duty on specialised equipment and
machinery
 Fisheries and Forestry - Duty free concession on
specialised equipment and machinery.
6. Exercise books  Remove Section 10 concession
OTHER NEW MEASURES
 Telecommunication Levy
- A 1% levy will be imposed on all voice call charges. This Includes:
 landline phone bills or land line top up cards;
 mobile phone post pay bills; and
 mobile phone top up cards or pre-pay bills.
- The levy will be collected by service providers and remitted to FRCA on a monthly basis.
 Credit Card Levy
- A 2% levy will be imposed on all Credit Card purchases and payments.
- The Reserve Bank of Fiji will draw up guidelines for financial institutions for smooth administration of
the tax.
- The levy will be collected by financial institutions and remitted to FRCA on a monthly basis.
 Third Party Insurance Levy
- 20% levy will be imposed on premiums.
- This levy will be collected by Insurance companies and remitted to FRCA on a monthly basis.
 Luxury Car Fee (new and used)
- A new customs levy of $7,500 will be imposed on luxury cars of a cylinder capacity exceeding 2500cc
but not exceeding 3000cc, upon point of sale. This excludes single and twin cabs.
- A new customs levy of $20,000 will be imposed on luxury cars of a cylinder capacity exceeding 3000cc,
upon point of sale.
 Home Stays
- FRCA will strengthen compliance on home stay operators.
 Gold Card System
- An incentive system will be introduced for best and compliant taxpayers.
 Decentralization of FRCA Offices
- FRCA will open new offices in Rakiraki and Sigatoka from 2012.
 Upgrade of Tax Portal
- Tax portal to be upgraded in 2012.
 New Income Tax Decree
- The new income tax decree will come into effect on January 1, 2013.
 PAYE as Final Tax
- To be effective from 2013.
- All the taxable allowance (except FNPF) will be removed in line with reduced tax rate in 2012.
 Self Assessment
- Self Assessment will be introduced in 2013.
 Presumptive Tax
- Presumptive tax will be introduced in 2013.
 Tax Penalties
- Tax penalties will be increased in 2012.
 Garnishee of Joint Accounts
- Issuing of garnishee on bank joint accounts with spouse or children will be effected, provided the
source of income is determined to be the income of the taxpayer.
For avoidance of doubt, please refer to the 2012 Budget Supplement

Comments

Taking a Wrong Turning... said…
A Social Responsibility Levy? Now who could have dreamt that one up? It smacks of socialist, planned economies and Stalinist Dogma. Pure 'Remains of the Day'? Very revealing.

If we are so "socially responsible", how come we have only in 2011 found out?

"History punishes those who arrive late" ( Mikhail Gorbachev)

He is still around to tell us why.

Germany's Chancellor, Angela Merkel, would recall through her dark East German upbringing. Which is why she is all for Free Markets and Free Enterprise, stemming from Friederich Hayek's Constitution of Liberty and despite his being an Austrian.

There IS no other way. But Rabuka went down a very wrong turning! Heaps of others went with him. Another reason for no WIN WIN. Too many mistakes to make up for?
Coralia said…
Its better to be late then never...you might not be receiving food vouchers & monthly allowances from the Social Welfare Department. 1 thing I can tell you is that there are a whole lot of fellow citizens on that list & more waiting to see if they have a chance to be put on that list that are grateful for that Social Responsibility Tax.

Socialist or communist or democracy - its the moral responsibility of any government to see to the well-being of its citizens & I don't see anything wrong in taking a mere 1% from the filthy rich to feed the under-privileged & the needy.
Dismal Science said…
@ Coralia

There IS nothing wrong in a 1% tax on the wealthy: nobody suggested that there was. So watch the argument. However, planned economies require sustainability. That is the 'subtext'. The underlying, critical question. How sustainable is this? It has to last to 2014. It should also have been applied much, much earlier. Timing is everything. That is precisely why 'arriving late' will be puniched.

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