Tax Talk- Offshore remittance and currency

Tax Talk- Offshore remittance and currency

Fiji Revenue & Customs Services, 04 January 2019 – Fiji’s import based businesses form an integral part of Fiji’s economy. The rapid increase in offshore transactions made by individuals and businesses are directly linked to the growth in economic activities both domestically and internationally. As we look at this offshore transactions and how offshore payments have become a common trait for individuals and businesses in Fiji, it is important to understand the process that must be followed to ensure that offshore payment is made in compliance with the tax laws and requirement of Fiji.

Offshore Payments above $20,000
It is important for resident individuals and businesses to understand that when a payment needs to be made to a non-resident individuals or businesses whereby the gross amount paid exceeds $20,000, there is a requirement to obtain a Tax Clearance Certificate from the Fiji Revenue & Customs Service before remitting the funds. Banks and other financial institutions will not facilitate offshore payment if the persons remitting does not have a Tax Clearance Certificate. Where the nature of payment attracts taxes then the resident individual or business will be required to pay the taxes applicable first before the Tax Clearance Certificate is issued. Offshore Payments less than $20,000 Whilst we understand that remittances above $20,000 requires a Tax Clearance individuals and businesses must also be reminded that offshore payments below $20,000 will still be required to be directed to FRCS for stamping of documents before payment is made. This means that the Fiji Revenue & Customs Service will still be required to clear the amount remitted offshore through the proper approval stamp known as the “Remittance Approval Stamp”. Without the proper remittance approval stamp from FRCS the payment will not be remitted by the banks.

Any non-resident person who derives interest, royalty, insurance premium, management fee, natural resource amount or fee for the provision of professional or other independent services from sources in Fiji is required to pay Non-Resident Withholding Tax at rates which is applicable as per their nature of transaction plus 9% VAT Reverse Charge. However, Non-Resident Withholding Tax will not be charged if the person or company receiving the payment has a permanent establishment in Fiji.

Currency Carried Offshore
Persons traveling into or out of Fiji are required to declare to Custom officials at the borders if they are carrying on themselves or in their possessions, any currency or bearer negotiable instruments of $10,000 or more (or equivalent amounts in foreign currency).

Negotiable bearer instruments include cheques, traveller’s cheques, bills of exchange, promissory notes, certificate of deposit, money orders, postal orders, bearer bonds and other debt instruments.

Travellers must make this declaration on a Fiji Immigration Departure Card for departures and also by completing a Border Currency Reporting Form which will be made available at the Customs counter at the ports or airports. For travellers arriving into Fiji, this will need to be declared on the Passenger Arrival Card and also by completing A Border Currency Reporting Form.

Currency Reporting at the Border
Where a person fails to report an amount in excess of $10,000 in currency or negotiable instruments to FRCS either at the time of arrival or departure commits an offence that is liable to a fine not exceeding $60,000 or an imprisonment for a term not exceeding 10 years or both.

Furthermore, under the Exchange Control Act a person is entitled to travel with maximum amount of FJD$500. This means that the FJ$500 travel allowance will not be required to be declared by the individual at our Customs counters in the airport.

However, any individual who wish to carry Fijian currency that is in excess of FJ$500 will be required to obtain prior approval of the Minister.

Where individuals are carrying Fijian currency that is in excess of FJ$10,000 then the individual is required to obtain permit from RBF before it is declared at the border.

The travellers who arrive into Fiji from a foreign port with currencies equivalent to FJD$10, 000.00 or more need to declare it on their Passenger Arrival Card and also fill out a Border Currency Reporting form. There is no limitation on the amount of currencies that a traveller can bring into Fiji however Customs Officers may enquire on the purpose of the funds being brought.

The Fiji Revenue & Customs Service will continue its surveillance role to ensure that all individuals and non-individuals making offshore remittances comply with the tax requirements. Everyone is responsible to correctly declare to FRCS any offshore remittances for proper clearance. As such where taxes are applicable then taxes must be settled first before remittance. The Fiji Revenue & Customs Service urges individuals and businesses that remit money offshore to come on board and be tax compliant as failure to comply will result in penalties.