Withholding Tax

Business & Self-Employed

What it is?

It is tax deducted for income such as dividend, interest, royalty that are received by either a resident or non-resident. It also applies to payments received for the hire or rent of films or the use whether by way of purchase or long term hire.

Categories of income to which it applies

Withholding Tax are tax authorized by Sections 8, 8A, 9, 9A, 10 and 10A of the Income Tax Act in respect of dividend, interest, management fee, miscellaneous, know how payments and royalties. It also applies to payments made for hire or rental of films.

1. Non-Resident Dividend Withholding Tax (Section 8 Income Tax Act)

• A withholding tax of 15% known as Non-Resident Dividend Withholding Tax will apply on gross amount of dividend payable to a non-resident by a company incorporated in Fiji [and which has been paid or credited, either wholly or partly, from chargeable income upon which no tax has been paid by that company].
• Dividend means any amount distributed by a company, whether carrying on business in Fiji or not, to its shareholders
• Company being wounded up
• Not wounded up or liquidated
• Partial Reduction of Assets
• Reconstruction or reorganization- Not Public
• Reconstruction or reorganization-  Company

The person liable for the tax shall be the person to whom or in whose favour a dividend is declared paid or credited.

Non-Resident Miscellaneous Withholding Tax (Section 8A Income Tax Act)

• A withholding tax of 15% known as Non-Resident Miscellaneous Withholding Tax will apply on gross miscellaneous amount payable.

Tax is payable in respect of following payments:

• Hire or rent of films
• Any know- how payments and any sum paid or credited for the management of, or supervision of, or the supply of any similar activity in connection with the carrying on of a business…,

Any sum paid or credited for the supply of professional services or other independent activities of similar character.
Costs such as accommodation and travel costs that are paid to the non-resident consultant in addition to the normal fees paid for services rendered will also be subject to the non-resident miscellaneous withholding tax. The person liable for the tax shall be the person to whom or in whose favour the sums mentioned above accrues. The person making the payment is responsible to remit the amount deducted to FRCA every month.

3. Non-Resident Interest Withholding Tax (Section 9 Income Tax Act)

• A withholding tax of 10% known as Non-Resident  Interest Withholding Tax will apply on any interest accrued after 31 December 1973 to or in favour of-
• Any non-resident, other than company.
• The estate of a deceased person who was, at the date of his death , anon-resident ; or
• A company not resident in Fiji

If the debtor in respect of any such interest is a resident or carries business in Fiji.

4. Resident Interest Withholding Tax (Section 9A Income Tax Act)

• A withholding tax of 20% known as resident interest withholding tax shall be paid in respect of any interest which accrues to or in favour of a resident if the debtor of any such interest is a financial institution.

The person liable for the tax shall be the person; estate to whom or in whose favour the interest accrues.

5. Dividend Tax (Section 10 Income Tax Act)

• A withholding tax of 15% known as dividend tax shall be paid in respect of any dividend paid or credited by a company incorporated in Fiji [and holding an operating license granted under the Tax Free Zones Decree 1991], if the shareholder or other person in whose favour the dividend has been paid or credited  is a resident.

The person liable for the tax shall be the person; estate to whom or in whose favour the dividend accrues.

Royalty Withholding Tax (Section 10A Income Tax Act)

• A withholding tax of 15% known as royalty withholding tax shall be paid in respect of any royalty paid as defined in Section 10A(1A) of the Income Tax Act.

The person liable for the tax shall be the person to whom or in whose favour the royalty or other payment accrues.

Double Tax Agreement country rates

The table below details the withholding tax rate that applies in respect of each of the payments to a party from one of the countries having a double tax agreement with Fiji.

Country	Royalty	Interest	Dividend *	Management Fee	Know-How
NZ	15%	10%	15%	15%	15%
UK	15%	10%	15%	15%	15%
Japan	15%	10%	15%	15%	15%
Korea	10%	10%	15%	15%	15%
Australia	15%	10%	20%	15%	15%
Malaysia	15%	15%	15%	15%	15%
PNG	15%	10%	17%	15%	15%
Singapore	15%	10%	15%	15%	15%
UAE	10%	10%	15%	15%	15%

Dividend withholding tax will only apply to the extent that dividend are distributed out of retained earnings on which no corporate tax has been paid.

Allowing of Tax Credits

In case where tax credit is given the income should be included in the calculation of total income and tax chargeable shall be abated by any withholding tax paid.

Evidence of tax paid should be submitted to substantiate claim. If evidence is lost, a certified copy can be obtained otherwise no credit will be given. Under the Double Tax Agreement (NZ, UK, Japan, Korea, Australia, Malaysia, PNG, Singapore and United Arab Emirates), member countries do exchange information where this can be sorted out.

How do I claim for withholding tax paid?

A certificate of deduction must be obtained from the person making the payment. This certificate must be attached to your return of income.

What happens if the certificate is lost or not available?

You will not receive any credit for the tax deducted at source. Upon receipt of your request in writing, we can assist you by calling on the person who made the deduction to provide the necessary details.
Further information

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

 

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