Value Added Tax (VAT) is a tax on spending that is levied on the supply of goods and services in Fiji at the rate of 12.5%.

The tax is collected on behalf of the Government by businesses and organizations which have been registered with the Revenue Collection Division. 

Basic operation of VAT system

• adapt your accounting system.
• collect the VAT on your sales of goods and services.
• calculate the VAT you collect (or that you are obligated to collect), and the VAT you paid (or owe) during your reporting period.
• lodge your return, when required.
• claim your VAT refund, or pay your remittance.

Adapting your accounting system

Once you register, you should start preparing your accounting records to accommodate VAT. To support your VAT charges and input tax credit claims, you must keep tax invoices and other accounting records for at least seven (7) years, and make them available to Risk/Compliance auditors, when requested.

Collecting the VAT

The rules governing value, place and time of supply are:

• value of supply made:  this determines the VAT which should be collected & remitted to the Revenue Collection Division
• place of supply:  this determines whether a supply is subject to VAT at a standard rate, zero rate, or whether not subject to VAT
• time of supply:   this determines when the liability to VAT occurs

Where most transactions will be at arms length (i.e. buyer and seller are not connected, and time of sale will be quite clear).  In these instances, the value of supply will be the price paid; the place of supply will be where the item sold is situated; while the tax liability will arise at the earlier of invoicing, payment, or delivery.  

If a person is registered on a payments basis VAT will be remitted once payment is made or received, regardless of the tax liability.

Calculating VAT refunds or payments

As a VAT registered person, you are responsible for filing VAT returns on which you will report:

• the amount of VAT you have collected, or you have invoiced, from your customers during each reporting period.
• the amount of VAT you paid, or owe, on business purchases made during the same period, and
• the difference between these two amounts (payable/refund).

You claim input tax credits for the VAT paid, or owing, on:

• purchases directly related to the taxable products or services you supply to customers.
• other items(overhead or indirect expenses) bought or rented for your business (e.g. electricity, office supplies etc).

Lodging returns, payments and refunds

Every registered person must "...on or before the last day of the month following the last day of every taxable period, without notice or demand furnish to the Commissioner a VAT return..." (Section 33)

Payment must be accompanied with your VAT return and be received by the return's due date.  

You are to mail your VAT return to the Revenue Collection Division (CEC) office in Suva, Lautoka or Labasa.

For more information on VAT click here.

VAT Reverse Charges

What it is and when it is charged?

A charge applied to a recipient on the value of supplies received from overseas at the rate of 12.5%. Supplies are taxable through the reverse charge provision. (Section 21(2))

Example of services subject to VAT reverse charges:

• the filing, prosecution, granting, maintenance, transfer, assignment, licensing or enforcement, of intellectual property rights, including patents, designs, trademarks, copyrights, know-how, confidential information, trade secrets or similar rights;.
• advertising services.
• services of consultants, engineers, consultancy bureaux, lawyers, accountants, and other similar services, data processing and provision of information. etc (S.14-Second Schedule).

Who should account for it and when?

The recipient of the service is required to calculate the output tax on the value of the service and pay the relevant output tax to FIRCA. The recipient is treated as the supplier of the service and is also entitled to claim an input credit for the amount paid in the VAT Return.

When should it be accounted for?

The recipient should account for the VAT reverse charges at the time the service is paid for to prevent any unnecessary delay in the issue of related tax clearance.

VAT penalties

The following penalties apply under the VAT Decree:

• late payment penalties – 25% of any tax remaining unpaid.
  
• late lodgment penalties – 20% of any tax remaining unpaid.
  
• omitted VAT income penalties – a 75% of the omitted amount would be the penalty charged, whether arising from understatement of sales or overstating of expenses.
  
• penal tax (evasion or fraud) – A person who knowingly or recklessly makes a false or misleading statement is liable to a fine up to $10,000 or imprisonment for a term not exceeding 12 months or both.