FRCS response to EU
In response to the European Union Code of Conduct Group’s recent labelling of Fiji as a non-cooperative jurisdiction, the Fiji Revenue & Customs Service (FRCS) would like to clarify that the move will prove largely symbolic, having virtually no impact on the extremely minimal EU trade and investment in the country.
The EU’s decision was based on the incentive package that Fiji uses to attract and cultivate new business –– such as moving headquarters to Fiji –– thereby spurring domestic economic activity and job creation. Fiji stands by its business incentive package –– one that has contributed to the nation’s unprecedented nine-year streak of economic growth.
The EU did not carry out an impact analysis on the impact that the removal of these tax incentives would have on the Fijian economy, despite requests from FRCS. Without an impact assessment, the haphazard removal of standing tax policies would have been hugely irresponsible. FRCS voiced these concerns to the EU, noting the economically-destructive impact that removing tax incentives would have, including the loss of thousands of Fijian jobs, to no avail.
To be clear, the nation’s tax policies –– which are in line with international standards –– do not create any tax avoidance opportunities that would allow EU businesses to artificially shift their profits to Fiji to minimize tax. On the contrary, Fiji has demonstrated that these incentives create real economic activity and has direct impact on the nation’s macro-economic stability. The EU’s decision was both ill-informed and out-of-touch with the needs of a developing economy.
International organizations, such as the International Monetary Fund (IMF), have spoken highly of Fiji’s tax reforms during their various missions to Fiji, and have used Fiji as a model country for responsible and innovative economic policy in the region.