Fiji Hotel and Tourism Association, 18 June 2026 – Fiji’s tourism industry is no stranger to compliance. Our members understand the need for proper tax reporting through transparent systems and a level playing field for businesses that are doing the right thing.
The upcoming Phase 3 rollout of the VAT Monitoring System (VMS) is therefore not a question of whether the industry supports compliance. It absolutely does. The real question is whether wider implementation recognises how tourism businesses operate.
As the deadline based on business size and turnover approaches, businesses are either still waiting for solutions that are fit for purpose or waiting for FRCS to accredit said solutions. Accreditation for POS and Sales Data Controller suppliers opened in early 2026. Tourism operators are expected to transition to accredited Electronic Fiscal Devices by 1 July 2026, meaning fiscal invoices must be issued through accredited systems from that date. Full enforcement is expected to begin from 1 October 2026, after which non-compliant operators may face penalties.
That leaves the period between July and September as the practical transition window by which operators are expected to test, integrate, train staff and resolve issues before enforcement begins. On paper and policy, that may sound reasonable. On the ground, it is far more complicated.
Tourism is not akin to a supermarket business model. In a supermarket, a customer selects an item, it is scanned, payment is made, and the transaction, noting the paid VAT amount, is complete with the data sent back to FRCS. It is usually a clean, direct process, unless someone has forgotten to let the supermarket know that the receiving end underwent an upgrade.
A hotel or resort is different. One guest stay can involve accommodation, food and beverage, spa services, activities, transport, retail purchases, commissions, deposits, advance bookings, split payments, refunds, cancellations and charges from both in house and off-site providers. Some services may be booked months ahead. Some are paid through agents. Some are charged to a room and settled later.
And we haven’t even touched on the many business models in operation. These include – independent (privately owned and operated), franchised (fees paid to operate under a global brand), managed (operations outsourced to a professional management company), leased (an operator assumes full operational and financial risk), strata titled/management rights (individual investors own units in a complex where a manager might hold “management rights” to operate rentals and caretaking, or body corporates involved). Additionally, these models may be a mix or a “hybrid” of 2 or more models considered less cumbersome to operate in a Pacific Island State.
Into this complex hotel modelling soup, are also the support service providers – land, air and marine transport services. One might simply provide a ticket to and from a destination, while others provide a variety of “hop on and hop off” options (we have many islands to see and experience) that provide the customer the flexibility to stay as long as they want to and to change their minds as they travel routes that offer many stopovers. Then while they’re travelling, they’re offered packages to eat, drink, stay overnight, use activities like diving and snorkelling and so on and so on.
And before you wonder about the revenue-earning capacity for these many tourism businesses, keep in mind that around 80% of these businesses are locally owned. Not just the hotels, but the experiences, transportation systems, activities and supply lines that feed into these networks.
The guest simply sees one, packaged, satisfied holiday. The business behind that holiday sees a moving puzzle of systems, payments, multiple third parties and accounting treatments that, despite being many moving parts, must be able to be captured. It is a critical operational requirement that all these operational components are integrated into one transparent tracking system. Where every transaction is logged, costs allocated to the right department, and consolidated reporting shows both department-level detail and whole-of-business performance. Yet despite such tracking, it still often requires painstaking monthly reconciliation processes to fully encapsulate the broad spectrum of tourism offerings the industry must consistently keep adding or tweaking to deliver based on changing travel trends and demands.
Think of a complex tourism business like a wheel with many spokes. Each spoke (restaurant, housekeeping, spa, events, accommodation, activity, etc) must connect to the hub (finance system). The wheel wobbles if even one spoke is missing or disconnected. So, capturing all the moving parts ensures the wheel runs smoothly to give owners, managers, and regulators a clear, reliable view of financial performance.
Into this complexity comes the VMS compliance requirement that is not simply about buying and connecting a piece of software or hardware. Depending on the business’s ownership model, brand, size and back-end complexity, this may mean changing front office processes, retraining staff, upgrading systems so they can talk to one another, reviewing how deposits are handled, understanding how refunds are recorded and ensuring that the system works during busy check-in and check-out periods, as well as capturing the reconciliation process. Whenever VAT is charged at a completed transaction (not necessarily at check-out), a real-time signal is received by FRCS, which is then measured against the monthly VAT reported. That’s the expectation anyway.
There are, of course, financial costs to the business to incorporate this ability for FRCS to track real-time VAT charges against what is eventually rendered back to them. It has taken a while, but encouragingly, the market is beginning to respond with accreditations of VMS solutions offering options for compliance pathways. But no single software platform will suit every operator. A small property with a simple booking model has different needs from a larger resort with multiple revenue centres. The cost of the software for a 300-room hotel will be around $25,000 annually, with a monthly $5.00 PER ROOM charge. That cost varies by system, size and even brand, especially where international brands have strict security and financial reporting policies. More cost to the business, less revenue moving across to the government. But the VAT reporting process is considered worth this we are told. We hope someone lets the government know why they will receive fewer tax dollars as a result.
Our feedback to FRCS has remained consistent. Implementation must be practical, guidance must be clear, and the system must recognise the realities of tourism and the fact that with this industry, one size does not fit all. The goal should be effective compliance without unnecessary disruption to businesses or guest services.
There is also a broader question that still needs a clearer answer. FRCS already receives tax information through existing monthly reporting. VMS is intended to confirm VAT compliance in real time, but we are still trying to understand how this will improve compliance outcomes, particularly among businesses already operating outside formal systems.
Compliant businesses will invest in approved systems, train staff, upgrade processes and will try hard to meet deadlines. The concern is whether non-compliant or informal operators will face the same level of scrutiny and what this enforcement might look like. A fair tax system must not place the greatest burden only on those already visible to the regulator – how will confirming compliance in real time allow anyone to detect who isn’t compliant? That is the nub of the question.
There is, however, a longer-term opportunity. If handled properly, VMS could support wider digital transformation across the tourism sector. Many operators are already investing in upgraded property management systems, online payment platforms, automated reporting and better business tools. Greater integration could reduce manual processes, improve reporting and support stronger decision-making.
That is the positive version of this rollout. But it depends on whether implementation is managed with enough practicality, flexibility and industry-specific understanding. In preparation for July, tourism operators are already speaking with software providers, reviewing existing systems, identifying gaps, training staff and ensuring they understand how the rules apply to their business model. Between July and September, testing and integration must be treated seriously. By October, enforcement begins.
And all this is taking place WITHOUT the confirmation that we will see the required amendment to the VAT Act that addresses the current anomaly of the time of supply rule that puts businesses using deposits and proformas at a disadvantage, that might later have to reverse or adjust changes depending on whether the service was actually supplied fully.
Tourism is ready to comply. It has always been understood that proper systems matter.
But readiness does not look the same across every business, and implementation must be measured by more than the existence of a deadline.
Clarity, practicality and transparency for applicability are all still needed.
Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 18 June 2026)
Fiji Hotel and Tourism Association
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