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Fiji VAT to 15%

Fiji is raising VAT from 12.5% to 15% from 1 January 2011. This was announced last Friday and gives businesses very little time to get ready for the increase. It will be interesting to see how they go and whether transitional measures similar to those introduced in New Zealand will be used to deal with insurance contracts and the like. Even with those concessions there have been grumbles from consumers in New Zealand annoyed at paying the new rate on goods and services (particularly utilities) they received before the rate change date.

Fiji’s businesses have more recent experience with VAT rate changes than New Zealand businesses with their last rate change being in 2003. So there’s every chance this won’t phase them too much. They also have some quite good transitional measures from when VAT was first introduced there in 1992 which they could call upon.

With 1 January falling on a Saturday perhaps things will be a little simpler but I feel for those who are now going to have to work extra hours over the holiday period to get everything ready. If consumers decide to go on a pre-rate rise spending spree there could be a xmas shopping bonanza for retailers but some may find the short lead in means they don’t have time to stock up in anticipation.

The refund scheme for tourists has also been extended so that the minimum qualifying expenditure limit applies to a tourist’s entire stay rather than as a daily limit.

Supplies of fish to Fiji fish processors will be exempt from VAT in future.

There are lots of other tax and duty changes in last week’s Fiji Budget with the other big news being the proposed introduction of a capital gains tax from 1 February 2011.

Iain

3 replies
  1. Rob Judd
    Rob Judd says:

    I was in Fiji first week December 2010 and was being charged at a rate of 17.5% at a well known resort chain!

    I think the hotels are simply ripping us off, we have made an official complaint to the management.

    Reply
  2. iainblakeley
    iainblakeley says:

    Good point. Presumably both taxes can’t apply to the same transaction? Wonder if the policy makers have considered this. I guess if section 11(a) does apply then arguably the gain is not a “capital gain” but unless there’s an exception in the CGT legislation there’s certainly room for confusion at the very least.

    Reply

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