2024-2025 Fiji National Budget Highlights

Budget Highlights

By Atnesh Prasad, Tax Director

The Honourable Professor Biman Prasad, Deputy Prime Minister for Finance, Strategic Planning, National Development & Statistics, announced Fiji’s 2024-2025 National Budget on the morning of June 28, 2024.

The 2024-2025 budget represents a shift towards transparency, addressing previous criticisms and responding accordingly.

While continuing several incentives and initiatives from previous years, the budget introduces new measures based on past data and economic forecasts.

More details of the 2024-2025 Fiji National Budget are highlighted below:

Fiji Budget Estimates

2024-2025

Tax Measures

Income Tax

1. Advance Tax Payment Rules

The payment of advance tax payment rules will revert to pre-pandemic regulations.
For companies, effective from the 2025 tax year, advance taxes will be paid in the sixth, ninth, and twelfth months of their tax year.
For other businesses, starting from the 2025 tax year, advance taxes will be paid in April, August, and November

2. Accelerated Allowance for Depreciation on Buildings

The accelerated depreciation allowance will be adjusted from the current 100% in the first year to 20% per annum over the next five years.

3. Depreciation Schedule

The depreciation rates will be expanded to include specialized assets such as dams and other assets specific to electricity generation

4. Transfer of Benefits for Reorganization

Tax losses incurred under the accelerated depreciation incentive can now be transferred under the reorganization provision, provided the same asset qualifies for the transfer

5. Incentive for 2031 Pacific Games Bid

A 200% tax deduction will be available for donations exceeding $10,000 to support Fiji’s bid to host the 2031 Pacific Games

6. National Rugby League (NRL) Bid Incentive

To support Rugby League Bid Fiji Pte Ltd’s bid for a place in the NRL competition, a 200% tax deduction will be available for sponsorships over $250,000

7. Business Losses

The provision introduced during the COVID-19 pandemic, which allowed the offset of business losses of up to $20,000 against employment income will be reversed, effective from the 2024 tax year

8. Fringe Benefits Tax (FBT) – Value per Quarter for Motor Vehicles

The FBT value per quarter for motor vehicles will be amended to the following new rates, effective from January 1, 2025.

Threshold (engine capacity)	New Rates
Less than 1,800cc	$2,000
1,800cc to 2,000cc	$3,000
Above 2,000cc	$4,000
Irrespective of the engine capacity, if the cost of the vehicle exceeds $100,000	$5,000 plus 4% of the excess of the cost above $100,000

9. Fringe Benefits Tax (FBT) – Value per Quarter for Electric Vehicles

The FBT value per quarter table will be extended to include electric vehicles, effective from January 1, 2025.

Threshold (cost)	New Rates
Less than $20,000	$2,000
$20,000 to $40,000	$3,000
$40,000 to $60,000	$4,000
Above $60,000	$5,000 plus 4% of the excess of the cost above $60,000

10. Exemptions for Non-profit Organizations

Non-profit organizations will now be subject to income tax on 'property income' in addition to 'business income' to ensure fair taxation

11. Clarity on the Incentive Applications

Provisional approval for incentives must be obtained before starting project construction.

12. Project Definition Under the Tax-Free Region Incentive

The definition of "Project" under the Tax-Free Region (TFR) Regulations will be enhanced to ensure that a TFR license is granted only to a new entity based at a single location within the TFR

13. TFR Incentive – Existing Indigenous Companies

The TFR incentive will be amended to allow existing i-Taukei companies to qualify for new investments over $250,000.

14. TFR Incentive

The new Pacific Koro Business Park development in Kalabu, Valelevu, will be declared a Tax-Free Region (TFR)

15. Information Communication Technology (ICT) Incentives

The ICT Incentive Regulations will be updated to require both provisional and final approvals and to align with European Union (EU) taxation standards

16. Pandemic Reserve

The 150% tax deduction for deposits to a pandemic reserve account will be removed following the World Health Organization's declaration of the end of the pandemic

17. Investment Allowance – Hotel Incentives

The investment allowance for hotel incentives will revert from 50% to 25%, its pre-pandemic level.

18. Short Life Investment Package (SLIP) – Existing Companies

The 20-year tax holiday for new hotels under SLIP will be extended to companies that acquire existing hotels and resorts and undertake extensions and refurbishments over $50 million

19. Drug Rehabilitation Centre Incentive

New incentives with tax holidays and import duty concessions will be available for companies establishing specialized Drug Rehabilitation Centres. The tiers of tax holidays are as follows:

Capital Investment	Tax Holiday Period
$250,000 to $1,000,000	5 years
$1,000,001 to $2,000,000	7 years
Over $2,000,001	13 years

20. Elimination of Double Taxation for Fiji Citizens Working Abroad

The Exempt Income Tax Regulations will be amended to prevent double taxation for Fiji citizens employed by the Fiji Government in countries without double tax agreements with Fiji

21. Employment Taxation Scheme

The 300% tax deduction for wages or salaries paid for work placements, apprenticeships, and part-time workers will be extended until December 31, 2025.
The 400% tax deduction for wages or salaries paid to persons with disabilities will also be extended until December 31, 2025

22. Sub-Division of Land Incentive

The Sub-Division of Land Incentive will be extended for another 12 months until July 31, 2025

23. Export Income Deduction

The Export Income Deduction incentive will be extended until the 2025 tax year

Tax Administration Act (TAA)
1. VAT Evasion Penalty	To strengthen Value Added Tax (VAT) compliance, a 200% penalty will be implemented for VAT evasion. Previously, a stricter 300% penalty existed but was temporarily suspended during the pandemic
2. Forfeited Refunds	The current policy regarding forfeited tax refunds will be revised. The new provision will allow taxpayers to offset any new tax liabilities against forfeited refunds
3. Offsetting of Refunds	This revision clarifies that tax refund balances held by the Fiji Revenue and Customs Service (FRCS) cannot be used to settle outstanding Water Resource Tax and Airport Departure Tax
4. Detained Non- Perishable Goods	The timeframe for seizing and detaining non-perishable goods will be extended from 10 days to 30 days
5. Bulk Data Collection	The FRCS will be granted the authority to request bulk data for risk analysis purposes

Value Added Tax (VAT) Act
1. Issuance of Tax Invoice for Transactions below $10	The Fiji Revenue and Customs Service (FRCS) will be amending the VAT Act to require the issuance of tax invoices for all transactions, regardless of the transaction value.
2. VAT Monitoring System (VMS)	The FRCS will be reactivating the VAT Monitoring System (VMS) program, which was previously suspended after the initial rollout of phases 1 and 2. Businesses that were included in these phases and have not yet implemented VMS will be required to do so. This reactivation will be effective on August 1st, 2024. The FRCS is also reviewing the industry list for the phase 3 rollout of VMS. They will announce a new industry list and the corresponding effective date at a later time
3. VAT Return Filing	The Fiji Revenue and Customs Service (FRCS) will be discontinuing the current option for annual VAT return filing. Instead, taxpayers will be transitioned to a system of filing VAT returns on a quarterly or monthly basis. This change will be effective on January 1st, 2025

Water Resource Tax Act
1. Increase in the Water Resource Tax Rate	The water resource tax rate for extracting less than 10 million liters per month will increase from 1 cent per liter to 5 cents per lite

General Matters

Pay Rise for Civil Servants: Effective August 1, 2024, salary-based civil servants will receive a pay increase of 7% to 10%, while wage earners will see increments ranging from 10% to 20%.

National Minimum Wage Rate: The national minimum wage will rise to $4.50 an hour starting August 1, 2024, with a further increase to $5.00 an hour from April 1, 2025.

Vatukoula Strike Settlement

The Coalition Government, in collaboration with the Fiji Trade Union Congress and Fiji Mine Workers Union, has resolved the long-standing strike with a $9.2 million pay-out.
Each of the 368 striking mining workers will receive $25,000, with $10,000 disbursed from this budget and the remaining $15,000 from the 2025-2026 budget.

FNPF Pension Restored:

This applies to pensioners who opted to continue with a full pension at reduced rates, excluding those who partially or fully withdrew their funds.
The government will cover the reinstatement cost, allocating $4 million this year, with an estimated total cost of $57 million over the next two decades.
Effective August 1, 2024, all affected FNPF pensioners will have their pensions restored.

Back to School Support: A $40 million allocation provides $200 in support per child from families with a household income of less than $50,000.

Termite Relief Packages: $2 million is allocated for homeowner relief packages, targeting repairs and reconstruction of termite-damaged houses.

Health Sector Funding: A total of $540 million is allocated, with $450 million for the Ministry of Health and $90 million for the operations of Ba and Lautoka hospitals under a PPP arrangement.

Tertiary Education Loan Scheme (TELS): $150.5 million is allocated to support 9,940 continuing students and 10,830 new students, with new schemes and enhancements to existing ones.

Fiji Roads Authority: Provided $354.8 million for ongoing road construction and maintenance, bridge and jetty upgrades and rural road improvements.

Water Authority of Fiji: $259.4 million is allocated to ensure consistent and efficient water and wastewater services for investors, businesses and homeowners.

Ministry of Sugar Industry & Multi-Ethnic Affairs: Receives increased funding of $76.1 million.

Ministry of Agriculture: An additional $6 million, totalling $101.2 million, to boost the agricultural economy.

Ministries of Fisheries and Forestry: Allocated $25.3 million and $31.4 million, respectively.

Ministry of Tourism and Civil Aviation: $68.8 million is allocated, including a $44 million grant for Tourism Fiji and $13.6 million for the Fiji Tourism Development Program in Vanua Levu.

New Co-operative Grant: Up to $100,000 for registered co-operatives in 15 sectors to diversify business activities. The Ministry of Trade Co-operatives & Small Medium Enterprises receives a total budget of $106.6 million to fund film tax rebates, business investments, digital initiatives and trade enhancement programs.

Conclusion

The 2024-2025 Fiji National Budget demonstrates a significant move towards transparency and responsiveness to public concerns. By incorporating new measures alongside continued support for existing initiatives, the budget aims to foster economic growth, improve public services and enhance the welfare of Fiji's citizens. This strategic allocation of resources is expected to address critical areas such as health, education, infrastructure and social welfare, setting a solid foundation for sustainable national development.

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