Are you an employer in Fiji? Important information you should know
PAYE FINAL tax commenced from 1 January 2013
The Income Tax (Employment) Regulations have been repealed
Taxpayers who only have employment income no longer need to file tax returns
Employees must lodge returns if they have more than one employment.
Particular requirements are in place for redundancies and non-resident employees.
Introduction The Income Tax (Withholding Tax) Regulations 2013 (Regulations) detail the responsibilities of employers with regards to the withholding of tax from employment income. It was announced in the 2013 budget that PAYE would be a final tax - meaning, in effect, that those whose income comprised solely of employment income would not be required to file a tax return. This is because the PAYE tax deducted operates as the employee’s payment towards their final tax liability, and if the correct amount is deducted, most employees will not have to file a return. As such, it is very important that the correct amount is deducted. The Regulations repealed the Income Tax (Employment) Regulations and commenced on 1 January 2013. As an employer, here are some things you should know about deducting and paying PAYE: Registration (FRCA) within 30 days from commencement of the trade, business, profession or vocation, or be liable to a fine not exceeding $1000 or imprisonment of up to six months, or both. Registration is by way of IRS001 or IRS003. There is no requirement for existing employers to re-register. Employee Tax Code Declaration An employee must file a tax code declaration (IRS458A) (TCD) with the employer within 5 working days from the commencement of employment. The TCD is not required to be lodged with FRCA. If the employment is the employee’s primary employment, the employee files a ‘P’ TCD. If the employment is the employee’s secondary employment, the employee files an ‘S’ TCD. The Regulations set out the various formulae for the deduction of tax in ‘P’ and ‘S’ categories. As an employer, if you do not receive a TCD from your employee within the 5 days, you must deduct tax at the rate of 20%. An employee with one or more ‘secondary employments’ may apply to FRCA for a Special Tax Rate Certificate. Redundancy The withholding tax rates under s 17A of the Income Tax Act continue to apply to redundancy payments. These are subject to change, so it is advisable to seek advice on the applicable rates. Monthly Responsibilities Taxes withheld by an employer for a month must be paid to FRCA and accompanied by a Remittance Advice Slip (prescribed FRCA form) by the end of the month following the month for which the deductions relate. The employer must submit an EMS in the approved electronic format, even if the wages paid do not require PAYE FINAL tax to be deducted because the employees’ income is below the threshold. In that case, a “nil” EMS must be filed (Form IRS 421A). In the event the employer pays an employee an amount that is likely to increase or decrease the amount of withholding tax to be remitted to FRCA, an employer may make the necessary adjustments during a payment period during the tax year. An employer may seek the Commissioner’s advice or if unsure about the appropriate amount of tax to deduct. Further, if there are unusual payments at the end of the tax year and the employee considers that the amount of tax withheld has been over deducted, he or she may seek clarification from the Commissioner, or file a written complaint. Non-resident employees Employers must deduct PAYE FINAL from wages paid to non-resident employees in the same way as for resident employees. However, there are non-resident tax rates that apply to non-residents. The most up-to-date non-resident tax rates are available on the FRCA website. A resident, as defined under the Act, means an individual who
Resides in Fiji;
Is domiciled in Fiji unless the individual has a permanent place of abode outside Fiji;
Is present in Fiji for a period of 183 days in any twelve-month period; or
Is an employee of the Government posted abroad.
A non-resident is liable for Fiji tax on income for personal services performed in Fiji, and other income from Fiji sources. How to make payments You can make payments:
Through internet banking (Bill Pay Services)
At a local bank branch
At FRCA’s Customer Service Centres;
By using FRCA’s drop box (cheques only); or
By credit card (a processing fee applies for each transaction)
Actions to consider
Familiarise yourself as much as possible with The Income Tax (Withholding Tax) Regulations 2013 before starting your business.
Establish a regular payment method that is convenient for you and your business.
Make sure you file the appropriate forms and are aware of which form is required in different circumstances.
Disclaimer The information set out in this article is a general guide only about the laws in Fiji and is not intended as specific legal advice.  Income Tax Act 2015 s 105(a).  The Income Tax (Withholding Tax) Regulations 2013 s 8.  The Income Tax (Withholding Tax) Regulations 2013 s 6(4).  The Income Tax (Withholding Tax) Regulations 2013 ss 6(3), 13.  Income Tax Act 2015 s 6.
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