What it is?
It is a tax withheld or deducted from income such as 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)
A withholding tax of 15% or as prescribed in DTA 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 an 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.
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).
The following amounts are exempt income –
1) Interest payable on a loan charged on the public revenue of Fiji if the Minister has declared the interest, by order, to be exempt income.
2) Interest paid by a resident company or a permanent establishment in Fiji of a nonresident company to a non-resident person in respect of a loan if the following conditions are satisfied—
- a) the loan was entered into outside Fiji;
- b) the loan was provided in a currency other than Fijian currency;
- c) the payer and recipient of the interest are not associates;
- d) the loan funds were for use by
- the resident company in a business carried on by the company in or outside Fiji; or
- the permanent establishment of a non-resident company in a business carried on in Fiji; and
- e) the interest is paid outside Fiji.
3) Interest credited to the account of a member of the Fiji National Provident Fund under the provisions of the Fiji National Provident Fund Act 2011.
4) The interest derived by an individual or a private entity, excluding a financial institution, from the financial instruments of the Government, a state owned entity or a statutory authority.
5) Interest derived by a citizen of a foreign country from a financial institution in Fiji recognised in the “Fiji My Second Home” programme administered by the Department of Immigration in Fiji—
- if the individual is below 50 years of age, the individual maintains a minimum deposit of $150,000 with a financial institution in Fiji for a minimum of 2 years; or
- if the individual is 50 years of age or older, the individual maintains a minimum deposit of $100,000 with a financial institution in Fiji for a minimum of 2 years.
In both cases, the exemption is available in the third or a subsequent year only if the individual maintains a minimum deposit of $50,000.
6) Interest derived by a non-resident person from a deposit in a Foreign Currency Account if the amount of the deposit is above the equivalent of $150,000.
7) Interest derived by a non-resident person from a deposit in a Fiji Dollar External Account.
8) Interest derived from a financial institution by a non-profit organisation.
9) Interest derived from a Bank—
- a) by a senior citizen (55 years old or above) or a pensioner in a year, which—
- does not exceed $30,000; and
- the CEO is satisfied that the interest income is their only source of income unless the other source of income is as specified in sub paragraph (b);
- b) by any senior citizen (55 years old or above) or a pensioner who earns a pension income paid by the Government, Fiji National Provident Fund or any approved fund and also earns an interest income as specified in paragraph (9)(a), shall be entitled to the exemption; and
- c) the interest derived from a licenced Bank, by an individual taxpayer gross income $30,000 or less in a year.
*Dividend – this regime was abolished effective 1/08/2017 applicable to Resident and Non-Resident
Transitional Rules for Dividend
Special rules apply to profits for the tax years 2014,2015 and pre 2014 undistributed profits. The company is required to pay the transitional 1% tax on undistributed profits for pre 2014, 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.
For more information please email to firstname.lastname@example.org