Provisional Tax /Company Advance Tax

Business & Self-Employed

The two categories of provisional tax payments are:

• 15% provisional tax on contractual payments.
• assessed provisional tax for sole traders.

Who is required to deduct the 15% provisional tax?

Under the terms of Legal Notice .70where a payment arises under any contract for services, including progress payments under a contract, the payer is required to withhold 15% of the payment and remit the amount to this office by the end of the month following the month in which the deduction was made. Any such deduction will be allowed as a credit against any tax assessed on the payee. The payer is required to get registeredas a provisional tax payer with PAYE Section if you are not already registered.

Real Estate Agents are also required to withhold and pay 15% provisional tax on rental income.

The provisional tax will not be deducted if the total amount to be paid to any one person in aggregate in any year is less than the provisional tax threshold of FJ$300 (effective from 1 January, 2005).The provisional tax will also not be deducted by the payer if the contracted party has a valid Certificate of Exemption issued by FRCA. Before a Certificate of Exemption will be given, the applicant must:

• have all their tax returns lodged.
• have all their taxes paid.

The above requirements shall also apply for shareholders and directors of a company.

If the applicant does not have a TIN, they must complete the form 

as well as the

Assessed provisional tax for sole traders

Self-employed taxpayers are covered by a provisional tax (PT) system under section 85 of the Income Tax Actwhich requires payment of tax in advance. The amount of provisional tax is calculated by reference to the amount of tax payable in the preceding year and is divisible by three (3).

The due dates for payment are:

• 30 April.
• 31 August.
• 30 November.

Provisional Tax paid will be allowed as a credit against the tax due on assessment of the actual liability for the year.

Company Advance Tax

A company is required to make four (4) advance payments of tax, with effect from 1 January, 2012:

• 30% to be paid not later than 30 June of current fiscal year.
• 30% to be paid not later than 30 September of current fiscal year.
• 30% to be paid not later than 31 December of current fiscal year.
• 10% to be paid by the end of February of the following fiscal year.  When an assessment is issued prior to an advance company tax installment becoming due, the amount of any liability will need to be paid by the due date specified in the Notice of Assessment issued under section 55 of the Income Tax Act.
• If the amount of company advance tax paid is less than the actual tax, the company shall be liable to pay an additional tax equal to 40% of the difference.

Insufficient Advance Payment Penalty Calculation

Example

Company X has paid $2000 advance tax for 2012. Upon assessment, the tax payable is $3000 for same year. Therefore the company has short paid the 2012 advance tax by $1000.

Hence In sufficient Advance Payment Penalty

40% * ($3000-$2000) = $400.00
Note

For income year 2011 and before the advance payment of tax by every company to the Chief Executive Officer may continue under the percentage and installment payment of tax applied before the commencement of this Decree.

The advance payment will be allowed as a credit against the tax due on assessment.

Further information:

Contact Us or alternatively by email: (tepu@frca.org.fj, cectaxquerysuv@frca.org.fj or info@frca.org.fj).

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