Debt Management Unit
The Section is responsible with the recovery of debt from taxpayers.
Once assessments are raised from either normal tax returns or audits, taxpayers are allowed thirty (30) days to clear their debts. However, if these debts are not cleared within the specified period, the Debt Management Service will institute recovery action.
What will happen if I cannot pay my debt within the stipulated thirty (30) days?
The taxpayer will be informed about the outstanding debt and the due date of payment.
- time-to-pay arrangement.
- issuing of garnishees to the banks and/or to the financial institutions.
- placing of charges on properties.
- field calls/surprise visits.
Recovery methods
There are recovery procedures allowed under the Income Tax Act which authorises the Debt Management Services to recover the outstanding dues like the following;
-
Garnishee Notice
This is to charge debt owed to the taxpayer, preventing payment to the taxpayer and requiring payment to FRCA. Any third person, paying money to FRCA as required by the garnishee notice is taken to have been authorized by the taxpayer. The third person is indemnified for all the monies paid to FRCA.
Certain types of monies that can be garnisheed:
Charges
- fixed deposits.
- passbook savings account.
- easy access card accounts.
- salaries.
- wages.
- rents.
- royalty.
- pension.
- director's fees.
- annuity.
- compensation.
DMS can register charges on a registered person's real or personal property.
In the case, it takes longer to recover the debt, a charge can be enforced by seeking a forced sale application to the High Court that the land or building be sold.
- Distress powers
Where all recovery procedures have been exhausted and in the case, taxpayers have assets that can be distrained and are not cooperative with DMS Section, their assets can be seized and sold to recover the debt.
- Departure prohibition order
A taxpayer who attempts to depart the country without settling his tax arrears may be denied to live the country through the issuance of a departure prohibition order (DPO).
A DPO is a legal authority issued by FRCA to prevent a taxpayer with tax arrears to depart out of Fiji.
Time-to-pay arrangement
A time-to-pay (t-t-p) arrangement is when the taxpayer requests to pay in installments when they cannot make the full payment due to financial constraints.
Only the Debt Management Service does the ttp arrangement.
Field call
Visiting taxpayers business or private premises is part of DMS's recovery procedure. The need to do a field call arises where:
- ascertain whether taxpayers' business is still operating;
- collect money from the taxpayer;
- deliver final notice or any letters;
- visit taxpayer to inform them of the debt owing and when debt is to be paid.
Obstructing a DMS officer from carrying out their duties is an offence under the Income Tax Act and VAT Decree.
Offences/Penalties
- Income Tax
A 25% late payment penalty (LPP) is normally imposed on the overdue balance of any unpaid tax liability.
-
VAT
A 10% additional tax is imposed on any outstanding VAT liability and 2.5% thereafter on any remaining balance on a monthly basis.
Lodgement Enforcement Unit (LEU)
The Lodgment Enforcement Units' primary task is identifying defaulting taxpayers and getting them to lodge their outstanding/overdue returns.
Requests for extension of time to lodge returns are also handled by the Unit, which also administers the tax agent lodgment program (TALP).
How?
By issuing a demand letter detailing the outstanding/overdue years or periods.
When do we issue Demand Letters?
Demand letters are normally sent out immediately after the statutory due dates.
Which returns are demanded for?
- salary and wage earners.
- business.
- companies.
- annual summaries.
- VAT.
Requirements
Outstanding returns are to be lodged within 14 days from the issue of demand letter(s).
Extension of Time
Requests for extension of time to lodge returns are to be made on or before the statutory due dates.
How:
- letter to be written to the Manager Lodgment Enforcement Unit.
- reasons for not being able to lodge on time are to be stated.
- expected lodgment date.
Tax Agent Lodgment Program
The purpose of the Program is to spread the workload of tax agents and Revenue Collections over any calendar year, resulting in improved administration for all parties concerned.
A report detailing the name of the tax agent , their list of clients with respective extended due dates and extension numbers are detailed in the report.
