What it is?
It is a tax withheld or deducted from income such as dividend, interest, royalty, insurance premium, management fee, natural resource amount or fee for provision of professional or other independent services that are received by either a resident or non-resident.
Non-Resident Withholding Tax – Management Fee, Professional Services and Other Independent Services (Section 10 and 113 of Income Tax Act and Legal Notice No.5)
A withholding tax of 15% must be applied and shall be withheld from the gross amount payable in respect of following non –resident payments:
- Management Fees or any other supervision fees;
- Professional Services Fees or any other independent services fees;
The person liable for the tax shall be the person to whom or in whose favor the sums mentioned above accrues.
This tax will not apply if the services giving rise to fees are rendered through a permanent establishment in Fiji of the non-resident person and also if the income is and exempt income of the non-resident person.
Non-Resident Royalty Withholding Tax (Section 10 and 113 of Income Tax Act and Legal Notice No.5)
A withholding tax of 15% must be applied and shall be withheld from the gross amount of any royalty paid to a non-resident.
This tax will not apply if the royalty income is and exempt income of the non-resident person.
Non-Resident Interest Withholding Tax (Section 10, 113 Income Tax Act)
A withholding tax of 10% must be applied and shall be withheld from any interest paid or credited to –
- Any non-resident individual or company not resident in Fiji.
- The estate of a deceased person who was, at the date of his death , a non-resident
Resident Interest Withholding Final Tax (Section 112 of Income Tax Act)
When a resident person or a non-resident company based in Fiji makes a payment of interest to a resident person, he/she is required to withhold 10% of that payment and pay the amount withheld to FRCS, unless it is exempt income of the recipient. The amount withheld is known as ‘Resident Interest Withholding Tax’ (RIWT).
1. All Individuals with gross income up to $16,000 from all sources inclusive of interest income will be exempt from RIWT;
2. Senior Citizens (age 55 and above) with interest income up to $16,000 with no other source of income;
3. Pensioners earning pension and interest income up to $16,000 with no other source of income;
4. All individuals with annual Interest Income up to $200;
5. Interest income earned by financial institutions such as banks; and
6. Interest income earned by non-profit organizations (NPO).
Dividend Withholding Tax – Non-Resident (Section 10, 113 Income Tax Act)
- Effective from 1st January 2016, a withholding tax of 9% should be applied on gross amount of dividend payable to a non-resident by a company incorporated in Fiji
- The person liable for the tax shall be the person to whom or in whose favor a dividend is declared, paid or credited.
Dividend Withholding Tax – Residents (Section 112 Income Tax Act)
- Effective from 1st January 2016, a withholding tax of 3% apply to a resident person on the gross amount of dividend paid by a resident company
- The resident company must withhold the dividend withholding tax and remit to FRCS
Transitional Rules for Dividend
Special rules apply to profits for the tax years 2014 and 2015. The company is required to pay the transitional 1% tax on undistributed profits for 2014 and 2015. Shareholders will not be taxed on dividend income paid out of these profits if the company had paid the transitional 1% tax.
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