Audit & Compliance Structure

Introduction

The Audit & Compliance division of Taxation is responsible to deter and detect non-compliance with tax obligations.  There are offices in Lautoka and Labasa who are responsible for the western & northern division and part of the maritime zone. The Suva office is responsible for the central division and remaining islands of the maritime zone.

Structure

The Suva and Lautoka regional offices comprise of teams aligned to the segments of the taxpayer community i.e. Small & Medium, Large and International who are responsible for auditing across the entire range of tax types. The Labasa regional office has a mix of Large and Small & Medium team setup.

Large & International taxpayers have complex finance & business structure, multiple operating entities & international business dealings, cross border and tax transactions with related parties, high volume of transactions and contribute a significant portion of tax revenue.

Small & Medium taxpayers comprise of the majority number of taxpayers, high risk cash transaction, deficient document & record keeping and internal control operating structures.

The Suva regional office additionally has teams dedicated for the single tax type audits of Value Added Tax (VAT) and compliance activities for refund & deregistration returns, new dwelling house applications, and technical issues.

Also based in Suva is the Fraud & Evasion team who is responsible for auditing across entire range of tax types and recent initiative to conduct tax offence investigations to pursue prosecution proceedings.

Tax fraud include but are not limited to hiding income and bank accounts, hiding income in nominee bank accounts, hiding assets, creating false & altered documents and invoices, maintaining more than one set of accounting records,  making false entries & alterations in accounting records, destroying accounting records before required time limits have expired without approval of CEO, non-remittance to FRCA of taxes e.g. PAYE, VAT, Levies etc

The latest Suva regional office formation is the Transfer Pricing team whose intention is to focus and develop specialist auditing expertise and experience for transfer pricing issues.

Transfer pricing has become one of the most important international tax issues around the globe and it is therefore timely that Fiji should be addressing this matter. Transfer pricing rules apply to all sectors of the economy involving international transactions between associated parties.
The transfer prices adopted by a Multinational Enterprise have a direct bearing on the profit it derives in each country in which it has operations. If too little or too much is paid for the transfer of goods and services, the income will be understated. As a result the host country will not be getting its fair share of the total tax take.

As a general example, consider a group member in Fiji which sells goods overseas to an associated company, at a price that is less than the market selling price. The profit earned in Fiji is therefore reduced. Similarly, if a Fiji company purchases goods or services from an offshore group member at an inflated price, the profit it earns in Fiji is similarly reduced.

Transfer pricing is therefore concerned with manipulating prices either by paying too little or too much for goods and services resulting in “shifting profits” from one country to another.

FRCA adopts the positions outlined in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, and proposes to follow these guidelines in administering Fiji’s transfer pricing rules. Consequently, these guidelines supplement the OECD guidelines, rather than supersede them.

The principle reason why FRCA has drafted its own guidelines is to provide a practical Fiji focus on issues. This also assists in explaining transfer pricing in a way that is more accessible to taxpayers and advisors dealing with transfer pricing matters than the OECD guidelines.

The Transfer Pricing Team activities are as follows:

  1. Analyze the cross-border dealings between the associated enterprises in the context of the taxpayer’s business
  2. Select the methodology or methodologies
  3. Apply the methodology or methodologies, and
  4. Determine the arm’s length outcome and implement support processes. Install a review process to ensure adjustment for material changes.

Functions

Optimise Revenue Collection

Target taxpayers who:

  1. fail to register although a legal requirement (non- registrants)
  2. register using false information (false registrants)
  3. lodge late or do not  file tax returns
  4. underdeclare or do not declare income
  5. claim false tax deductions for expenses
  6. claim false tax deductions for  allowances  e.g. spouse, children, elderly dependants, insurance, FNPF etc.
  7. claim false tax credits  e.g. PAYE, Provisional Tax etc.
  8. do not satisfy tax incentive/concession requirements
  9. underpay (late payers) or do not pay (non-payers) tax obligations e.g. withholding taxes

Voluntary Compliance

Encourage civic moral duty of tax compliance to support:

  1.  public goods & services delivery
  2.  equal level playing field for conducting business activities
  3. fair share of tax burden to avoid resorting to tax levy increase
  4. Foster confidence in the tax system & administration
  5. Minimise Audit & Compliance intervention and burden for high tax compliance behaviour and make voluntary disclosures
  6. Increase detection and deterrence of ignorance, carelessness or deliberate low or non- tax compliance behaviour and apply administrative or court sanction penalty

Taxpayer Education

  1. Advise proper record keeping and accounting standards obligations
  2. Strengthen self-assessment capability to compute all income, report and pay tax accordingly and timely

Legislative Framework

  1. Enforce tax law as per policy (financial, economic, technical, social, political, environmental or legal)  intention
  2. Exercise vigilance  & recommend necessary legislation amendment when there is  unintended or unanticipated undesired consequences of tax law interpretation

 Intelligence

  1. Continuous acquiring, reflection and discussion of new knowledge to learn how things work and associated risks  to identify (why, who and what) factors that influence taxpayers ‘ compliance behavior and tax gaps
  2. Greater cooperation with other law enforcement organizations to exchange developments and awareness of new risks or mutations from existing ones.
  3. Mass media & members of the public information gathering
  4. FRCA staff situation awareness from daily taxpayer liaisons such as new  trade developments and existing risk changes
  5. Tax database mining and warehousing for comparing data or relating them with others i.e. a Top Down (strategic, tactical and operational) approach
  6. New legislation non-compliance opportunities
  7. Conduct of audits to identify level of compliance, awareness and experience required to manage risks i.e. a Down Up ( Taxpayer, Risk Area and General) approach, e.g. pilot audits.
  8. Demographic shifts

Tax Administration Service Delivery

  1. Courteous assistance, professional conduct, even-handed, transparent , simple and timely tax service delivery
  2. Uphold honesty, integrity and ethical values
  3. Improve  stakeholder  inclusive  dialogue and consideration
  4. Secure, maintain confidentiality and privacy of information, accounts, documents, records, or data storage device
  5. Use quality information technology systems and reliable & updated data
  6.  Improve organizational and management processes and performance measurement framework
  7.  Strengthen Law Enforcement Inter-Agency Networking & Cooperation interaction e.g.  Anti-Money Laundering ,  Export Proceeds Monitoring, Fishing License, Fiji Audio Visual, Hotel Investment Tax Incentives, Tourist Vessel Investment Incentives

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HEAD OFFICE LOCATION

CONTACT DETAILS

Revenue & Customs Services Complex,
Lot 1 Corner of Queen Elizabeth Drive
& Ratu Sukuna Road,
Nasese,
Suva.
Phone: (+679) 3243000
Fax: (679) 3315537
Email: info@frca.org.fj