CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
A withholding tax has been imposed on interest earned from financial institutions by resident depositors, unless they have supplied the paying entity with a tax identification number. See "Resident interest withholding tax" below.
TAXES ON CORPORATE INCOME
Normal tax is payable on taxable income at the following rates.
%
Nonresident shipping companies in respect of outgoing business form Fiji…………………………………………………………………………2
Mutual insurance companies in respect of life insurance income and nonmutual insurance companies to the extent their life insurance business is deemed to be mutual………………………… 30
Other nonresident companies carrying on business in Fiji (e. g., branch profits) ……………………………………………………45
Other companies…………………………………………………… 35
CORPORATE RESIDENCE
A company incorporated in Fiji is resident in Fiji. A company not incorporated in Fiji is resident in Fiji if it carries on business in Fiji and either its practical management and control are in Fiji or its voting powers are controlled by shareholders who are residents of Fiji.
OTHER TAXES
Resident interest withholding tax/A withholding tax of 35% is deductible from payments to or accrual of interest for resident depositors by banks and other financial institutions. However, this tax is not payable where the depositor provides a tax identification number to the financial institution number or where interest received does not exceed $F120.
Land sales tax/The profits arising from the sale of undeveloped land in Fiji, if not included in taxable income for income tax purposes, may be subject to land sales tax at rates ranging from 6.5% to 35%.
Excise tax/Excise tax is payable on tobacco and alcohol products manufactured in Fiji.
Value-added tax/A value-added tax of 10% on all taxable supplies of goods and services has replaced major indirect taxes. The supply of financial services, residential accommodation and education by an approved institution is exempt. Exports and international transportation are
zero-rated.
BRANCH INCOME
The tax rate on branch profits, 45%, is higher than the rate on profits of a resident corporation, 35%. There is no further withholding of tax on the repatriation of branch profits.
INCOME DETERMINATION
Inventory valuation/Inventories are normally valued at the lower of cost and net realizable value. While FIFO is acceptable, LIFO is not, for either book or tax purposes. Conformity between book and tax reporting is not required. There are no special provisions for valuing inventories or
determining inventory flows.
Capital gains/Currently, gains are not subject to tax, although gains realized from the sale or other disposition of property acquired for the purpose of resale or as part of a profit-making undertaking or scheme are taxable as ordinary income. Capital gains tax on inflation-adjusted realized gains, which was proposed to be introduced with effect from January 1,1994, has now been deferred indefinitely.
Intercompany dividends/Resident corporations may exclude dividends received from a company incorporated in Fiji from taxable income. There are no ownership requirements for this exclusion.
Foreign income/Resident corporations are taxed on their worldwide income.
Income derived from a nontreaty country may not be subject to tax in Fiji if the income is subject to income tax in the country of derivation.
Income derived from a treaty country is taxed according to the treaty. A credit is allowed in Fiji for foreign tax paid on the foreign income, limited to the lesser of the Fiji tax payable or the overseas tax paid on such income. There are no special provisions for taxing undistributed income of foreign subsidiaries.
Stock dividends/Bonus shares are tax free, except where paid out of revenue profits of investment or service-type companies. Tax-free stock dividends issued by private companies become taxable upon realization of shares.
Other significant items/Where a foreign-controlled business in Fiji produces less income than might be expected, the revenue authorities may determine the income for tax purposes. A person normally residing outside Fiji that disposes of an interest in land in Fiji held directly or through a shareholding in a company may be assessed to income tax on the profit on that disposal.
DEDUCTIONS
Depreciation and depletion/Depreciation is calculated on the prime coston the straight-line basis. The rates of depreciation are based on the estimated life of the asset. An initial allowance (
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