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Environment & Climate Adaptation Levy (ECAL)

Business & Self-Employed

 List of ECAL Registered persons as at 2017

What is Environment & Climate Adaptation Levy? 

The Environment & Climate Adaptation Levy(ECAL) is charged at the of rate 10% on the gross annual turnover of a prescribed service. ECAL is computed by applying the rate to the prescribed service amount. The ECAL is administered by FRCS however it will be collected by the prescribed service provider.

 

Who should register for Environment & Climate Adaptation Levy (ECAL)?

All prescribed service providers whose annual gross turnover in respect of the provision of a service listed under Schedule 1 of the Act exceeds $1.25million must register for ECAL in FRCS. This came into effect from 1 August 2018.

Service providers who now have an annual gross turnover less than $1.25million shall no longer be considered as prescribed service providers and are not mandated to impose ECAL as long as they are within the said threshold.

For new businesses, the owner or person who is responsible for the daily management of a prescribed service (Accountable Person) should register with FRCS once they become liable or legally responsible to register. The Accountable Person should first obtain a Taxpayer Identification Number (TIN), and then register for ECAL purposes. Registration must be done within 30 days before the business commences. In general, the Environment & Climate Adaptation Levy applies to licensed businesses. However, where a person may not have the necessary permits to operate, the person will be deemed to be registered for Environment & Climate Adaptation Levy, if their operations fall within the description of a prescribed service and provided that the gross annual turnover of the service provider in respect of the provision of that service exceeds $1.25million. 

Who is an Accountable Person?

“Accountable person” can be any one of the following persons – the owner, manager, sole precedent partner or any person who is responsible for the daily management of the prescribed service.

Liability to register upon reaching the taxable threshold

ECAL registration depends upon the ECAL taxable threshold. A service provider will be required to register for ECAL where the annual gross turnover for the provision of such service has exceeded $1.25million.

Once the above persons reach the taxable threshold, they should register at FRCS so that they can start including ECAL in their service charges. The effective date to start accounting for ECAL is the month of registration.

 

Services that will be subject to Environment & Climate Adaptation Levy are as follows:

 No

Service provider

Services subject to ECAL

1.

Licensed hotels

Accommodation, refreshments and any other services.

2.

Tourist vessels operating within Fiji waters

Accommodation, refreshments and any other services provided on board.

3.

Licensed bars

Meals, beverages and any other services provided in a licensed bar. This includes licensed bars located, for example, in private clubs.

4.

Licensed Nightclub

Services such as music, dancing or other entertainment including other services

5.

Inbound tour operators

Travel, tour and sight-seeing services.

6.

Organizers of entertainment programs /product exhibitions

Entry fees to the events venue.

7.

Recreational Activity operators

Recreational activities provided by these operators Eg. Skydiving

8.

Cinema Operators

Entry fees and all services provided within the cinema premises.

9.

Licensed Rental/hire car operators

With effect from 01/01/15 any hire of chauffeur driven motor vehicles. This applies to motor vehicles that –

  • come with a driver
  • does not have a meter
  • the fare is negotiated or is fixed

Includes vehicles with ‘LH’ license plates. it

It does not include the hire of taxis

Hire of rental cars and other  transport services by a  rental car operator

10.

Bistros and coffee shops

Meals, beverages and other services.

11.

Licensed Restaurants

Meals, beverages and other services.

12.

Aircraft operators

This applies to charter flight services except for charter flights for medical or natural disaster relief evacuations services are not subject to STT and ECAL.

13.

Water sports operators

All water sports activities including river safaris.

14.

Home stay operators

Accommodation and other services provided in a private residence or property that accommodates tourists, international students or overseas visitors who are paying guests. It does not apply to hostels/accommodation operated by public educational institutions.

15.

Unlicensed service operators

If a service provider is not licensed but meets the registration requirements and, it will be required to register and charge ECAL on the services provided.

 

 

Who is responsible for collecting ECAL?

The Accountable person or the prescribed service provider must account for ECAL collected for a period. In other words, once the prescribed service provider is registered in FRCS for ECAL purposes – it is required to collect ECAL from the date at which it was registered. The Prescribed Service provider becomes a collecting agent for government and is responsible for ECAL collection.

 

Accounting for ECAL

The Accountable person must account for ECAL on monthly ECAL returns. An ECAL return should be completed and submitted with a cheque/cash for the ECAL applicable on the turnover for that month by the end of following month.

 

ECAL Return. The forms are also available at any of our Revenue & Customs office Fiji wide.

 

Will the service providers be required to lodge ECAL Returns separate from the STT Return and the VAT return?

Yes, a separate return will be required for the Environment & Climate Adaptation Levy and the person accountable must submit a return together with the tax payment by the end of the month following the month in which the levy was collected. The due date for lodgment of the ECAL Return is also the due date for payment of the levy.  Example: ECAL collected in August 2018 must be paid to FRCS before the end of September 2018.

 

Do companies still have to lodge a monthly return if no ECAL was collected? 

In cases where the business continues to operate but there is no ECAL to report for a period, a return indicating that there was no turnover for that particular period must be submitted.  Accountable persons will be required to keep records to support the computation of ECAL. Penalties apply for failure to comply with any of the provisions of the Act.

 

Guidelines for calculating Environment & Climate Adaptation Levy

The two tables below show how the gross amount paid by a hotel guest should be calculated if a hotel owner is registered for ECAL, STT and VAT purposes.

Table 1 [manual records]

No.

Transaction Type

Charges (VEP)

ECAL

(10%)

STT

(6%)

VAT (9%)

Total

1

Accommodation

$100

$10

$6

$9

$125

2

Refreshments

$50

$5

$3

$4.5

$62.50

 

Total

$150

$15

$9

$13.5

$187.50

 

 

Table 2 [system-based records]

No.

Transaction Type

Charges (VIP)

VAT (9%)

Charges (VEP)

ECAL

(10%)

STT

(6%)

Total

1

Accommodation

$109

$9

$100

$10

$6

$125

2

Refreshments

$54.50

$4.5

$50

$5

$3

$62.50

 

Total

$163.50

$13.5

$150

$15

$9

$187.50

 

The table below shows how the gross amount paid by a hotel guest is calculated where the hotel owner is not registered for VAT.

Table 3 [when service provider is not registered for VAT]

No.

Transaction Type

Charges (VEP)

ECAL (10%)

STT (6%)

Total

1

Accommodation

$100

$10

$6

$116

2

Refreshments

$50

$5

$3

$58

 

Total

$150

$15

$9

$174

 

Displaying Prices

All prescribed service providers are required to clearly display ECAL and other tax charges on a receipt, invoice or tax invoice to ensure that customers are aware of the different charges they are paying for.

Under the VAT Act, registered persons are required to display the price of all prescribed services supplied at the retail level in Fiji as inclusive of tax (if any) chargeable on that supply. However, tourism publicity material utilized overseas to advertise the supply of any goods and services by any registered person may be displayed as exclusive of tax (if any) chargeable on that supply, provided that any tourism publicity material on which an exclusive of tax price is displayed must clearly state that the price displayed is subject to the tax. When issuing the receipt, the respective tax components should also be clearly shown to customers.

 

Record Keeping

  • ECAL accounts and records should be kept for at least 7 years
  • Where a person wishes to discard records before the end of the 7-year period, they must make an application in writing to the CEO.

 

Environment & Climate Levy Penalties

  • Any ECAL remaining unpaid after the due date for payment – 25% Late Payment Penalty applies.
  • If lodgment is late, 20% Late Lodgment Penalty will apply on the outstanding amount on the return.
  • An additional 5% late payment and late lodgment penalties will apply for each month of default on the unpaid tax.
  • Deliberate failure to maintain proper records – penalty equal to 75% of the amount of tax payable.
  •  Failure to maintain proper records due to ignorance or other reasons –  penalty equal to 20% of tax payable.
  • Deliberate false or misleading statements – penalty equal to 75% of the amount of tax shortfall.
  • Unintentional mistakes leading to incorrect returns – penalty equal to 20% of tax payable.

 

Offences

The courts can impose a maximum fine of FJ$15,000 or to imprisonment for a term not exceeding 12 months or to both a fine and imprisonment for the following offences:

  • Failure to file ECAL return
  • Failure to comply with obligations under Tax Administration Act.
  • Failure to produce any books or records relating to the turnover and collection/payment of ECAL

 

The courts can impose a maximum fine of FJ$25,000 or to imprisonment for a term not exceeding 24 months or to both a fine and imprisonment for the following offences:

  • failure to allow authorized tax officials from entering the hotel premises to inspect turnover, collection or payment records
  • making false or misleading statements

 

Further information:

For more information, please call Mr. Dhineshwaran Gounder on 3243503, Mr. Rajesh Bhan on 3243584 or simply email info@frcs.org.fj, or visit any of our office nearest to you.

 

 

 

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