Approved enterprises

The main features for any "approved enterprise" are:

• the concession period is five (5) years and may be extended for a further three (3) years.
• exemption is FJ$8,000 per annum or if greater than FJ$8,000 either 15% of the company's fixed capital investment whichever is smaller.

The percentage is further increased if the company employs a certain number of people.

Incentives are no longer applicable from 01st January, 2001, however exemption granted prior to 31st December, 2000 are still applicable until expiry dates.

Vanua Levu Incentives

These incentives were introduced by the government.

Small and micro-enterprise incentives

This tax incentive is for selected sectors.

Export incentives

The main features are export sales from the manufacturing of minor agricultural commodities (excluding sugar and copra) and processing products of deep-sea fishing are exempt. It also includes a product or trade manufactured or processed wholly or substantially for export but not directly exported by the company seeking approval.

Incentives are no longer applicable from 1st January, 2001 however; exemptions granted prior to 31st December, 2000 are still applicable until the expiry dates.

Film making and audio visual incentives

Depending on the type of production, the incentives can be summarized as follows:

• F1 - audiovisual production - 150% deduction for capital expenditure. Net income exempt until taxpayer has received a 60% return on capital expended.
• F2 - audiovisual production - 125% deduction for capital. Net income exempt until taxpayer has received a 50% return on capital expended.
• Film tax rebate - this includes the making of a film, television, video or broadcast program within the meaning given in the existing legislation. A tax rebate of 15% or up to a maximum of FJD$3.75 million is available, subject to a number of conditions.
• Studio City Zone Concessions - (a) A licensed audio-visual producer is exempt from the payment of income tax (except for withholding tax) on any income derived from the production activity carried on in the zone. (b) An approved individual who derives income from work in audio-visual production including fees, wages, royalties, profits, etc; and any income earned from sports performances including prize money, performance fees and endorsements is exempt from tax.

Approval letter and evidence of expenditure must be sighted before any concession is granted. 

Agricultural enterprises incentives

The main features are:

• the concession is granted in any five (5) out of eight (8) years from the date appointed by the Minister to any company engaged in farming or fishing, processing or exporting agricultural produce.        
• losses can be carried forward for ten (10) years.
• incentives are no longer applicable
• from 01st January, 2001; however, exemptions granted prior to 31 st December, 2000, are still applicable until the expiry dates. 

A 200% deduction on capital expenditure is available for all investors engaged in agriculture and fisheries activity for a period of 5 years w.e.f 1st-January 2006. The capital expenditure is allowed for capital investment on primary industries only.

• The activities under this assistance will include listed items under para 32 of Part V of the Depreciation Schedule.
• Also includes the purchase of farm implements and plant & machinery used on the farm as well as cost of irrigation.
• The incentives will be available to all taxpayers not enjoying other concessions under the Income Tax Act.
  
  

New Investment or re-investment for Food Processing and Forestry (Value Adding)

The main features are:

• 100% deduction claimable on capital investment relating to food processing and forestry. The deduction is available for those new businesses engaged in value adding process.
• Re-investment for expansion purposes can also claim such deduction.
• 50% of local produce should be utilized in the production process by the investor in order to qualify for the concession.

Maritime vessels investment allowance

The concession is 55% of the total capital expenditure incurred in the construction of the vessel.

Application is made to the Minister for Tourism who forwards the recommendations to the Minister for Finance. 

Experimentation and research & prospecting

Subject to the Commissioner's discretion, expenditure incurred:

• on experimentation, scientific research or investigation connected with the taxpayer's business or
• on prospecting for minerals in Fiji , by a holder of a valid mining right may be allowable even though income from this source has not been earned yet.

Contributions to the Fiji Visitors Bureau

One and a half times the amount of any contribution by taxpayers carrying on business in Fiji to the Fiji Visitors Bureau.

Any Deductions authorized under the 11 th Schedule

Tax concessions are available under the 11 th Schedule of the Income Tax Act to a person who has received approval to build a hotel or expand an existing one. Applications for the concession must be made in the specified manner to the Ministry of Finance before work begins on the project.

The hotel incentives include 55% investment allowance or Short Life Investment Package ( SLIP ). An applicant may apply for either of these incentives but not both for the same project .

Standard Allowance

A person wishing to carry out a project may apply in writing to the Minister of Finance for approval on the proposed project. Click here for the list of information that needs to be submitted in the application .

At the completion of the project, a final approval in writing must be obtained from the Minister to enable the applicant to claim the allowance in the Income tax return a year after the completion of the project.

In addition to an investment allowance of 55% of approved capital expenditure (excluding the cost of the land), normal depreciation allowance is also allowable.

The investor is entitled to claim allowance as a tax deduction against income. If the deduction cannot be offset against the taxable income of the hotel owner for the first year of income after the commencement of operation or after the completion of the extension then it must be carried forward and offset against the taxable income of the next successive fiscal years of income of the hotel owner until the amount is wholly offset.

The investment allowance will only be given to Fiji residents or non-residents if there is no shift in tax revenue to other countries. The capital expenditure allowable under refurbishment and renovation shall be given only to a hotel, which has been in operation for a period of not less than 5 years .

A further concession is available beginning after the year in which the hotel commenced trading; the period in which losses can be carried forward for eight (8) years under certain conditions.

2009 HOTEL INCENTIVE PACKAGE - NEW SHORT LIFE INVESTMENT PACKAGE (SLIP)

This incentive is applicable to capital investment over $7,000,000 for the building of a new hotel commencing on or after 01 January 2009 and the building is completed on or before 31 December 2018.

The Minister responsible for Finance in consultation with the Minister for Tourism may give provisional approval to an investor. When applying for a provisional approval, the operator is required to submit with their application a list of information. Click here for the list of information that needs to be submitted in the application.

When the provisional approval is given, the investor is eligible to import capital equipment, plant & machinery, imported within a specified timeframe duty-free in respect of their importation.

Upon completion of the short life investment under provisional approval, the investor may apply to the Minister for final approval by submitting the following with the application:

• fully audited final accounts showing the total cost of the short life investment; and
• a final approval plan showing the site, layout and surrounding areas of the hotel;
• certificate of completion; and
• payment certificate to contractors.

If final approval is given to a company, the income of that company is exempt from tax on profits derived from the operation of the hotel for a period of 10 years.

Donations to approved charities

The amount paid is allowable up to a maximum of FJ$100,000 . In order to be listed as an approved charitable institution, an application must be made in writing to the Commissioner who will consider and make decision(s) accordingly.

Export promotion deduction

One and a half times the amount of any expenditure approved by the Fiji Islands Trade and Investments Bureau (FTIB) incurred towards promotion of export of any product, provided the company was granted concessions under the 5th schedule of the Income Tax Act (abolished w.e.f. 1st January, 2001). Details are submitted with the income tax return and the assessor determines the amount allowable using the guidelines. 

Cyclone reserve account

This is in respect of deposits by a company in a bank account set up as a reserve against cyclone damage and other natural disasters. The deduction is restricted to 1.5% of the replacement cost of the building used for commercial, industrial or agricultural purpose.

Employee taxation scheme

One and a half times the amount of salaries and wages paid to a new employee. The employee should not have been previously employed on a full-time basis.

Click here to download criteria for this incentive.

Export income deduction  

Export income deduction – income derived from the business of exporting goods or services is exempt on a reducing scale between the years of 2001 to 2008.The export income deduction will only be allowed if the Commissioner of Inland Revenue is satisfied that the export earnings will be remitted to Fiji.

Note:
The above percentages do not apply to the Vanua Levu Incentives.

New businesses established on Vanua Levu between 1 st July 2005 and 31 st December 2010 are entitled to a 100% deduction for export income derived subject to certain specific requirements.

Investment allowance

Between 2001 to 2008, a taxpayer conducting an investment business may claim a deduction of 40% on capital expenditure (excluding buildings, passenger vehicles and trading stock) on any new or second hand (if imported) capital asset.

The total cost of the asset(s) must be at least FJ$50,000 and the claim is allowed only once in the year of purchase.

The allowance is restricted to the following businesses:

• agricultural, forestry or marine resource business i.e. a business that processes or manufactures Fiji natural resources. The resources must be substantially transformed (e.g. sausage making machine, machinery used in bottling mineral water) . It does not include rebottling and repackaging.
• an information technology business means a business providing services using information technology and delivered by using open networks such as call centres. It does not include businesses that sell or repair such equipment.
• rural manufacturing business – must be located not less than 25 km (measured by the most direct road route), from the main post offices in Suva , Lautoka, Nadi, Nausori or Navua. 

SPECIAL DEPRECIATION PROVISIONS

Accelerated depreciation allowance for specified companies

The allowance is granted by the Minister of Finance if he is satisfied that it is expedient for the economic development of Fiji.

The deduction is one-fifth (1/5) of the capital expenditure incurred by the company on the provision of buildings, plant and equipment and the claim is made in any five (5) out of eight (8) years beginning in the year in which such expenditure was incurred and the next seven (7) consecutive years.

The amount deductible is one-fifth (1/5) of the capital expenditure incurred on the provision of buildings, plant and equipment but excluding the cost of land and site preparation.

Allowance for capital expenditure - fuel economy and alternative sources of energy

The Minister grants approval on application by the taxpayer. This concession could be briefly summarized as follows:

• a deduction of 100% of expenditure incurred is permitted where any adaptations are made to buildings, plant and machinery presently employed in the trade or business where such expenditure is considered to be expedient for the purpose of reducing the consumption of electricity or fuel oil or its derivatives.
• an initial allowance of 50% of the expenditure is given for the purpose of economizing in the consumption of electricity incurred upon plant and machinery purchased to replace the plant and machinery presently used in the trade or business in substitution for the existing initial allowance.
• a fuel economy investment allowance of up to 40% of the expenditure incurred upon plant and machinery purchased to replace plant and machinery used in a trade or business, and using an alternative energy to electricity or fuel oil and its derivatives.

The maximum relief of 40% would be granted where an asset is used in trade or business, which generates energy from a source of energy, which is indigenous to and is produced in Fiji.

Allowance for improvements

Taxpayers engaged in pastoral pursuits may claim a deduction for capital improvements to land and buildings either in the year that the expenditure is incurred or over five (5) consecutive years. Special conditions apply to buildings.

The Commissioner grants the allowance.

Allowances for buildings

The current rates were effective from 1st January, 2001. Annual allowance for buildings were increased regardless of the date in which the building was completed (e.g. concrete buildings from 1.5% to 2.5%).

Building depreciation

Accelerated allowance for buildings

The main features are:

• approval is granted by the Commissioner subject to the following conditions:

• cost or value certified by a registered architect or engineer.
• production of completion certificate.
• the building is used for agricultural, commercial or industrial purposes and is erected within the period specified in the legal notice.

• the taxpayer cannot offset any loss arising as a result of this claim against income from other sources during and after the concession period.

• if, after the concession period, the full depreciation has not been utilised normal depreciation can be claimed on the balance.