Resident Interest Withholding Final Tax

Effective from 1^st August 2018, banks and other financial institutions are required to deduct 10% Withholding Tax from interest payments to its customers. Resident Interest Withholding Tax is a final tax which means that the gross amount of any interest income paid or credited to resident individuals by a financial institution in Fiji will be taxed at a fixed rate of 10% and will not be assessed under tax table as it was done prior to 1^st January 2013. Where Interest is their only source of income, bank account holders do not have to lodge income tax return in 2014 and subsequent years as banks should have deducted the correct amount of tax from interest income. However if the RIWT has been over deducted, the taxpayer may lodge a NRIWT/RIWT Refund Form.

Previous years interest withholding tax rates

Exemptions from Resident Interest Withholding Tax (RIWT)

1.)   With effect from 1st August 2018, the interest income earned by an individual whose gross income is $30,000 or less in a year will be exempted from RIWT.

2.)   Senior Citizens and Pensioners

With effect from 1^st August 2018, all senior citizens (55 years old or above) and pensioners who earn interest income up to $30,000 are eligible to apply for a Certificate Of Exemption from RIWT provided this is their only source of income. The requirements for pensioners and senior citizens to qualify for COE are stated below:

Pensioners

– must be receiving pension or had received pension from an approved fund (e.g. FNPF, Fiji government   pension, other approved fund)

– total annual interest income must not be more than $30,000.00;

– current source of income must be from pension and interest only.

Senior Citizens

– must be 55 years old or above;

– total annual interest income must not be more than $30,000;

– current source of income must be from interest only;

3.)   interest income received by the depositor (customer) in the current year does not exceed two hundred dollars FJ$200. In those cases where interest is paid or credited monthly, quarterly or on some other basis, no withholding tax will be deducted if total interest earned in that period does not exceed the yearly equivalent of FJ$200 for those periods.

4.)   Interest earned from a financial institution by a non-profit organization.

5.)   Interest earned by financial institutions.

What are the requirements for the application of RIWT Exemption Certificate?

RIWT is collected by banks from interest paid, if the source of the deposit is not exempt income. Tax exempt persons need to have a COE to avoid having RIWT deducted from their interest. A certificate of exemption will only be issued to the following bank account categories;

• Term deposits
• Fixed deposits

Before a COE will be given, the applicant must:

• have all their tax returns lodged and
• have all their taxes paid and
• be able to explain the source of the funds on which interest is earned.

If the applicant does not have a TIN, they must complete the form Application for Registration as well as the Application Form for COE from RIWT.

Which form must be completed to obtain the RIWT exemption certificate?

1. Application for Certificate of Exemption from Resident Interest Withholding Tax (IRS600); or
2. Application for Certificate of Exemption from Resident Interest Withholding Tax for Pensioners & Elderly Citizens (IRS600A);

Once this certificate is presented, the bank is not required to deduct RIWT.

Where to lodge your application

The form can be hand delivered to any of our Customer Service Centers or sent by post. You do not need to buy a stamp for the envelope, as correspondence addressed to the Commissioner will be carried by Post Fiji free of charge.

How long does it take to process an application for RIWT?

It should be processed within a day. If an application is incomplete or if we require more information we will contact the applicant.

Validity of COE: The Certificate is valid till the maturity date.

What happens if RIWT is deducted before the RIWT COE is produced?

Individuals and non profit bodies that have been incorrectly taxed can claim for a refund from FRCS. They must complete and lodge a RIWT Refund Form – “Resident/Non-Resident Interest Withholding Tax (RIWT/NRIWT) Refund Form (IRS602)”.

Further information

For further assistance on Resident interest withholding tax , you may send an email request to info@frcs.org.fj