Suva, Fiji, Friday 26 June 2026: The Fiji Hotel and Tourism Association has made clear that the tourism industry did not propose, endorse, or “broadly agree” to the Government’s 5 per cent Tourism Services Tax or Service Turnover Tax.
FHTA Chief Executive Officer Fantasha Lockington said, “Any suggestion that the tourism industry agreed to this measure is misleading. A few representatives may have expressed support in isolated discussions, but they do not represent the wider industry. The overwhelming majority of FHTA members strongly oppose the tax in its current form and the lack of consultation before its announcement.
The CEO reiterated that while Fiji Airways is central to Fiji’s connectivity, visitor arrivals, trade, employment and national brand, support for a national carrier must be funded through a national fiscal response. It cannot be imposed on one sector already managing COVID-era debt, rising wage costs, labour shortages, infrastructure pressures, and one that is increasingly criticised for imposing rates that simply reflect the high cost of doing business while complying with labour, tax, health, OHS, liquor, NFA and every other regulatory requirement thrown at it.
FHTA stressed that the tax would apply regardless of profitability and would ignore margins, debt levels, seasonality, forward contracts, wholesale arrangements or an operator’s ability to absorb additional costs.
Operators cannot simply return to guests, agents or wholesalers to recover another 5 per cent without risking disputes, cancellations, destination and brand reputational damage or margin loss. Contracted rates, deposits and payments are legally binding and commercially locked in, meaning any attempt to retroactively add costs would breach agreements and undermine confidence in Fiji’s tourism product. The industry does not agree to absorb this turnover tax, and indications from members suggest the majority, if not all, will pass it on in its entirety. By not doing so, it would erode already thin margins, destabilise forward contracts, and compromise long term viability and absorbing the 5 percent turnover tax is neither practical nor commercially sustainable.” Ms Lockington said.
FHTA also warned that adding a 5 per cent charge to the current 12.5 per cent VAT would place a 17.5 per cent tax burden on affected tourism services before Fiji’s existing FJ$200 departure tax is considered, undermining Fiji’s competitiveness against other destinations – the very argument that was being used to pressure rate reviews and apply special packaging to address low seasons.
The Association has submitted that if Government’s objective is to raise revenue quickly for a national purpose, a broader national mechanism would be more equitable than a tax concentrated on tourism operators.
If Government proceeds with the 5 per cent turnover tax despite industry opposition, FHTA insists on minimum safeguards:
a) Excluding pre-existing contracted, deposited and paid bookings
b) Ensuring the tax does not apply retrospectively
c) Applying VAT-style input/output treatment to avoid cascading costs
d) Requiring the tax to be separately identified and administratively clear
FHTA has also called for a:
a) legislated sunset clause of no longer than 12 months, with receipts ring fenced, independently audited and publicly reported.
b) Service tax payers given the opportunity to establish a Special Purpose Vehicle entity for the tax contributions to be converted to equity in Fiji Airways.
Ms Lockington added: “Service tax in tourism is a levy imposed on the turnover or charges of prescribed tourism-related services, collected from consumers but remitted by service providers. Tourism operators cannot be asked to provide a one way transfer without clarity, accountability and a fair mechanism. Support for Fiji Airways must be national, transparent, temporary, conditional and fair. The tourism industry has not agreed otherwise.”
Fiji Hotel and Tourism Association
The Voice of the Industry
