Fiji Times Wednesday 02 August 2017 THE value added tax (VAT) was introduced in Fiji with effect from July 1, 1992, and it completed its 25 years of existence this year. The introduction of VAT transformed the entire taxation system in Fiji. It has resulted in significant restructuring of the income tax system such as introducing the income tax exemption threshold of $4500 and elimination of taxes such as basic tax that existed that time.
To minimise VAT burden on consumers at the time of VAT introduction, a number of other taxes that existed at that time were also removed. Today, this income tax exemption threshold has increased by almost seven folds. It must be noted that tax threshold amount began to increase rapidly over the last 10 years.
For example, in 2008, the threshold was $8840 and has increased to $30,000 in the 2017-2018 budget. Prior to VAT, there was no income tax exemption threshold as taxpayers were paying taxes from the first dollar of their income.
VAT has also positioned Fiji as a tax jurisdiction that exhibits modern taxation principles of economic efficiency, equity as well as simplicity in tax administration. The fundamental design issues for VAT is consistent with best global practise. The Fijian VAT system is business neutral, consumption driven and adopts destination principle, meaning that VAT is levied in the jurisdiction where goods are consumed. Read more…
