What it is 

Hotel Turnover Tax (HTT) is a tax that is levied on the VAT exclusive cost of turnover of hotels at the rate of 5% effective from 1st April, 2008. Turnover means the cost of accommodation, refreshment and other charges that would appear on a hotel guest's bill. The hotel owner has to collect the HTT shown on the bill.

HTT is levied on costs incurred by all customers that visit hotels to buy refreshments (e.g. food, alcoholic drinks and other beverages) and to enjoy other services provided by the hotel.

The following services however shall not be subject to the hotel turnover tax, if they are not operated or provided by a hotel, in accordance with Legal Notice No. 35:

• transfer cost.
• duty-free shop.
• tour operator.
• restaurant.
• dive operation.
• any other service.

Who should register for HTT?

All owners of licensed hotels should register with the Commissioner within 30 days after the HTT Act becomes effective. The effective implementation date is 1st June 2006, as highlighted in Legal Notice No. 24.

For new businesses, a hotel owner should first obtain a Tax Identification Number, then register for HTT purposes. Registration must be done within 30 days before the hotel commences business. The registration form is available on our website and Customer Enquiry Centers.

Deemed HTT registration

The person whose name appears in the hotel license issued under the Hotels & Guest Houses Act will be deemed to be the “accountable” person.

Charges on which HTT is levied

It will apply on all services provided by the hotel and charged to a guest's bill.

It will not apply on services provided by third parties or concessionaires.

It will apply on any charges that the hotel levies for arranging services provided by third parties or concessionaires.

Types of businesses that charge HTT

Only licensed hotels and vessels engaged in the carriage of tourists within Fiji and which provide overnight accommodation for passengers should charge HTT.

The definition of a hotel is given in the Hotels & Guest Houses Act . Hotels are licensed businesses that receive guests or travelers for a fee and include:

• a boarding house, lodging house, guesthouse or caravan.
• any part of a building, vessel, premises, structure, caravan or house on wheels.
• any place used by a hotel for overnight accommodation such as tents, camp sites.

It does not include accommodation in public institutions and those owned by registered charitable trusts/religious bodies and other similar educational/vocational institutions.

Who is responsible for collecting HTT?

Any person who is operating a licensed hotel and who has levied the HTT on hotel charges must account for it. To do this, the hotel owner or any other person who manages the day-to-day business of the hotel must first register for HTT purposes. This person is referred to, as the “accountable person” and any correspondence or queries on HTT will be sent to him.

Accounting for HTT

The Accountable person must account for HTT in monthly returns. A HTT return should be completed and submitted with a cheque/cash for the HTT applicable on the turnover for that month within 30 days. The forms are available on our website and Customer Service Centers.

A hotel owner may issue hotel bills that are HTT inclusive or HTT/VAT inclusive or separately depending on the record keeping system adopted. However, adequate records must be kept for audit purposes.

HTT Penalties

• any HTT remaining unpaid after the due date for payment – 25% Late Payment Penalty applies.
• If lodgment is late, 20% Late Lodgment Penalty will apply on the outstanding amount on the return.

Offences under the HTT Act

Action will be taken to recover the unpaid HTT and penalties from third parties (such as banks) or through the courts. The courts can impose a maximum fine of FJ$5,000 on any of the following offences:

• failure to keep adequate records and accounts relating to the turnover of the hotel.
• failure to allow authorized tax officials from entering the hotel premises to inspect turnover, collection or payment records
• failure to produce any books or records relating to the turnover and collection/payment of hotel turnover tax.

The Commissioner can also make an offer to compound an offence.

Guidelines for calculating HTT

The two tables below show how the gross amount paid by a hotel guest should be calculated if a hotel owner is registered for HTT and VAT purposes.

The table below shows how the gross amount paid by a hotel guest is calculated where the hotel owner is not registered for VAT.

NOTE:

• HTT is always calculated on the VAT exclusive amount.
• VAT is calculated in the same way but the base figure shall not include the HTT amount.

Guideline for calculating monthly - HTT & VAT totals

The example below shows how the respective tax amounts is worked out at the end of the month, given that the gross amount includes both VAT and HTT.

Example:

Gross Amount = FJ$82,000 (including VAT and HTT)

Step 1

Work out the tax portion and round it up to the nearest whole cent. This amount is a portion of the total VAT and HTT (tax fraction), included in the gross amount for the month. The tax fraction is derived using the formula (r/100 + r). So for a hotel owner registered also for VAT, the tax fraction would be equivalent to (12.5 + 5/100 + 12.5 +5). The tax portion could therefore be mathematically derived by dividing the gross amount by 117.5 (the sum of 100 plus the respective VAT & HTT rates).

Tax portion = gross amount/117.5

= FJ$82,000/117.5

= FJ$697.87

Step 2

Work out the VAT component that should be declared as Output VAT in the month's VAT Return.

VAT Component = FJ$697.87 * 12.5

= FJ$8,723.38

Step 3

Work out the HTT component that should be declared in the month's HTT Return.

HTT Component = FJ$697.87 * 5

= FJ$3,489.35