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Environmental & Climate Adaptation Levy (ECAL)

Business & Self-Employed

 List of STT Registered persons as at 15th January 2016

What is Environment & Climate Adaptation Levy? 

In the 2017/2018 National Budget announcement, the Minister for Economy had announced that the Environmental Levy (EL) will be renamed as the Environment and Climate Adaptation Levy (ECAL) and increased from 6% to 10%. ECAL is aligned to Fiji’s COP 23 Environment Protection Initiatives which reinforces Government’s commitment for all Fijians the right to a clean environment. ECAL would mostly be applicable to Visitors that come for the luxury of the accommodations and the natural beauty and recreational opportunities in Fiji, and they will have to pay a small additional charge to support environmental protection programmes. The Levy will be administered by FRCS however it will be collected by prescribed service providers.

 

The Environment & Climate Adaptation Levy will be levied at the of rate 10% on the ‘turnover’ of prescribed service providers effective from 1st August 2017. In other words, ECAL is only charged or levied on prescribed services listed under the Environmental Levy Act. ‘Turnover’ means the total charges for prescribed services billed to consumers.

 

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

All prescribed service providers are required to register for ECAL in FRCS however for those service providers who are currently registered for Service Turnover Tax do not have to register as FRCS will automate their Environment & Climate Adaptation Levy registration.

 

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 Tax 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 prescribed services. 

 

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

For the following prescribed services, registration depends upon a ‘taxable threshold’:

  • Bistros and coffee shops – turnover $1.25 million and more
  • Provision of meals/beverages in a licensed restaurant – turnover $1.25 million and more

 

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:

 

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. This only applies to service providers with a gross turnover of  over $1.25 million dollars

11.

Licensed Restaurants

Meals, beverages and other services. This only applies in licensed restaurants with an annual gross turnover of over $1.25 million dollars.

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 EL.

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 EL on the services provided.

 

 

Who is responsible for collecting ECAL?

The Accountable person must account for Environment Climate Adaptation Levy (ECAL) collected and any correspondence or queries on ECAL will be sent to him/her.

 

Accounting for ECAL

The Accountable person must account for ECAL in monthly 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 available at our Centers.

 

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 2017 must be paid to FRCS by 29th September 2017.

 

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 Decree, 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 (Section 34 of TAA 2009)

  • 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 Noa Rokona on 3243595 or simply email info@frcs.org.fj, or visit any of our office nearest to you.

 

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