Vanua Levu Incentives

What it is

In 2005, the Government introduced a set of fiscal incentives designed to attract investment and general development on the island of Vanua Levu. These incentives were announced in the 2006 National Budget Address. The aim of the incentive package is to stimulate growth, employment, creation and investment in Vanua Levu.

The investor will receive a tax benefit on the amount spent on raw materials, capital and labour. The package includes the following:

  • 300% tax deduction on capital expenditure [section 21 (1)(za), Income Tax Act].
  • 200% tax deduction for employment taxation scheme [section 21(1)(zb) Income Tax Act].
  • 100% tax exemption export incentive [section 21B (6) Income Tax Act].
  • duty free importation of capital items.
  • duty free importation of raw material.

Administration of the incentives

The incentives available under sections 21 (1)(za), 21(1)(zb) and 21B(6) of the Income Tax Act is available to existing businesses set up in Vanua Levu provided that there is increased sales by at least 25% or more than five (5) new persons are employed from 2006.

Persons wishing to take advantage of these incentives may make a claim through the normal lodgment of income tax returns.

All the requests for Vanua Levu duty concessions are to be addressed to the Chief Executive Officer. Taxpayer's will be advised in writing of the Authority's on the matter. The Vanua Levu tax incentives will be claimed.

In addition, a taxpayer will be entitled to claim other existing incentives such as:

  • accelerated depreciation write-offs.
  • 40% investment allowance.
  • export income deduction (section 21B).
  • duty suspension scheme.
  • losses carried forward to eight (8) years and
  • Hotels Aid Act incentives (55% investment allowance or 10-20 years tax holidays, etc).

Vanua Levu includes Taveuni , Rabi, Kioa and other islands in the Northern Division.

Tax deduction on capital expenditure

A 300% tax deduction may be available on capital expenditure spent to set up a new business in Vanua Levu . The 300% tax deduction allows firms to deduct a substantial amount from its taxable income in the year the investment is undertaken.

Conditions:

  • the threshold is FJ$40,000.
  • period of this incentive shall be 5 years only (1st July, 2005 to 31st December, 2010).
  • capital expenditure excludes land or buildings, passenger vehicles or trading stock.

The incentive is available to specific industries including:

  • information communication and technology;
  • agriculture;
  • forestry;
  • mining; and manufacturing:
  • textile, clothing and footwear (TCF);
  • timber manufacturing;
  • fishery manufacturing; or
  • ship building and maintenance works.

Employment taxation scheme

A 200% tax deduction is allowed for all first time employees for the first twelve (12) months . This policy will enable businesses to recruit more school leavers as employees.

The deduction will provide tax benefits to the investor; the more persons employed, the greater the benefit that the investor will receive. The incentive is available from 1st January, 2006 to 31st December, 2008.

Export Incentive

A 100% deduction for export income derived from a new business established on the island of Vanua Levu between 1st July, 2005 and 31st December, 2010 is available for all exports. To ensure that this policy is compliant with the requirements of the World Trade Organization, the exportable commodities must be substantially transformed. This means that the raw materials being used must be significantly converted into the exportable commodity.

“Substantial Transformation” means a process applied to Fiji's natural resources which results in a different classification under the Harmonised System (HS) codes of the processed materials from that of the unprocessed materials, but excludes:

  • repacking and rebottling
  • logging of timber

Duty Free importation of Capital & Raw Material

Capital

Duty free importation of capital, plant and machinery. From the investors' position, the low duty rate will lower the establishment cost of their business

Raw Material

Duty free importation of raw materials used for manufacturing. As in the case of capital, plant and machinery, the lower duty rate on raw materials will also lower the cost of production of businesses.