Major changes in taxes and policies have been announced in the 2020/2021 National Budget by Minister for Economy, Aiyaz Sayed-Khaiyum to stimulate the economy and to bring back confidence in the different sectors, with a lot of anticipation to see the much needed growth during this recession. While making the announcement, Sayed-Khaiyum says $3.67 billion has been projected for government expenditure while $1.67 billion has been allocated for revenue for the 2020/2021 National Budget. This will bring the Debt to GDP ratio to 83%.
Sayed-Khaiyum says these tough measures have to be taken as government believes raising taxes in a recession is wrong and cutting spending will mean cutting jobs and government services to the people.
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He says government funded resources are targeted where they are needed the most.
Sayed-Khaiyum has confirmed that Fiji will soon drop quarantine requirements for NZ tourists.
He says Fiji's national carrier, Fiji Airways and hotels will also offer the attractive packages that will get tourists coming to our shores again.
The 6 percent Service Turnover Tax has been eliminated and ECAL or Environment Climate Adaptation Levy will go down from 10 percent to 5 percent.
For the reduced ECAL, the turnover threshold is now $ 3 million annually.
Sayed-Khaiyum says so for mid-sized tourism operators and other businesses like restaurants, rental car companies and cafes, ECAL is dropping to zero.
He says market survey has shown that Fijian resorts and hotels can be overpriced, especially when it comes to food and beverage services adding that as an immediate effect of these tax cuts, they expect the price structures for rooms, food, alcohol –– basically everything –– to drop precipitously.
He adds tourism operators should consider making these changes to their cost structure permanent.
Sayed-Khaiyum further says as Fiji looks to safely reopen to tourists, the hospitality industry can even get creative with all-inclusive options that allow us to be cost-competitive with destinations like Bali and Phuket, when they open for businesses, they will do so with a vengeance
Sayed-Khaiyum has also announced that excise tax on alcohol will go down by 50 percent.
Through Fiji Airways, the Fijian Government will give the first 150,000 visitors $400 each to go towards packages including flights, accommodation and Food and Beverages.
The government has also decided to abolish all stamp duties.
Fiscal duty has been reduced to 5 percent and import excise tax has been eliminated on a range of white goods including air conditioners, refrigerators, televisions, washing machines, dryers, dishwashers, microwaves, lawn mowers, hair dryers, toasters, electric stoves, kettles and smartphones.
The government says they are reducing import duty by 75 per cent on hybrid cars and non-hybrid cars. In addition, for new, non-hybrid cars they are reducing fiscal duty from 15 per cent to 5 per cent. Excise duty has been removed on all non-hybrid cars.
There’s no restriction on age for vehicles to qualify for these exemptions, but all non-hybrid cars must meet Euro 4 Fuel standards. The luxury vehicle levy has also been removed and the Accident Compensation Levy has been reduced by 50 percent through the next year.
Customs duties have been reduced for over 1,600 items.
From toothbrushes to spectacle lenses, contact lenses and artificial eye solution; to testing equipment for businesses to help lower production costs; to life jackets, life belts and fire alarms to strengthen public safety; to laundry detergent; to exercise books; to hygiene products like deodorant and shampoos; to food items, like tomatoes, jams, soy sauce, salmon, sardines, cereals, sweet biscuits, potatoes, chocolates, pasta, baking powder and peanut butter; and tourism-related equipment. You can check out the full list of items and duty and tax deductions on our website, fijivillage
Sayed-Khaiyum has also stressed to businesses that their prices must reflect the supply side discounts.
The Minister for Economy has also announced that to ensure that Fiji’s hard-fought progress in the fight against climate change isn’t lost, and to show that Fiji is dedicated to a “blue” economic recovery, next year, they still plan to add a ban on Styrofoam to the current single-use plastic ban, and they are launching the Blue Town Model in Savusavu –– a new, pioneering blueprint for coastal towns across the country and around the world to follow.
He says a public-private partnership that empowers coastal communities to make sustainability and resiliency central to their development and daily life, the Blue Town Model aims to help these communities adapt to protect the oceans in a way that simultaneously generates economic activity.
Sayed-Khaiyum adds the Savusavu Chamber of Commerce will work alongside town administrators to integrate the model’s various environmental safeguards.
All residential rent is now VAT exempt.
Sayed-Khaiyum says the provision allowing landlords to claim tax deductions on the sum for any reductions made in commercial rent will be extended to 31st December 2021.
The reduction of 10 percent to 5 percent for employer FNPF contributions will continue.
All employers who go beyond the call of duty and contribute more than 5 percent up to 10 percent of FNPF will be given 150 percent tax deduction backdated to 1st April 2020. This additional contribution will be exempt from taxes for employees.
The Minister for Economy says Fiji is making itself a manufacturer’s destination of choice with new incentives to tap into international eagerness to relocate assembly and manufacturing lines to Fiji, including through continued support towards the establishment of a Special Economic Zone in Navutu which they are developing in partnership with the FNPF and IFC to lay the groundwork for a tailor-made manufacturing facility which can be adapted to suit a variety of manufacturing purposes.
He adds for subsidised customers of Energy Fiji Limited, the first 100 units of power will continue to be discounted through 31st March of next year, with government and EFL each covering 50 per cent of this subsidy to ensure these customers pay only VAT on their first 100 units of power every month. He says for grid extension projects, EFL will consider –– on a case-by-case basis –– payment schedules up to six months or more for large capital investments.
He adds they will be lowering the bus fare for pensioners by ten dollars a month given the low usage they have recorded and a general COVID-associated drop in travel.
He says they are suspending the Parenthood Assistance Payments announced last year.
Sayed-Khaiyum says it is important they target resources on families facing the most severe hit to their finances rather than more broadly-focussed assistance payments.
He adds they will be taking the next year to review these payments to determine when and if they’ll resume.
From August 1st this year, Fiji's business license regime will be removed.
Fringe benefits by employers will be VAT exempt.
The 20 percent pay cut for all Members of Parliament will continue. There will be a 10 percent salary cut for all Permanent Secretaries, CEOs and heads of independent bodies.
Sayed-Khaiyum says there will be no pay cuts for other civil servants. Meal allowances will be reduced from $20 to $10 and there will be no overtime pay but time off will be implemented.
Those who are fully unemployed will continue to get $220 per fortnight.
Those whose working days or hours have been reduced will receive $44 per fortnight for every day they are no longer working.
So, if you are now only working three days a week, you will receive $88 every two weeks; if you’re down to working only one day a week, you will receive $176 every two weeks. FNPF will also allow withdrawals for those who have been unemployed for more than 6 months and who could not withdraw before.
He says Government has made $100 million available to make sure every unemployed Fijian is able to access their full relief payments.
He adds within that allocation, $5 million is dedicated to upskilling or reskilling workers whose old jobs have been lost, but for whom new opportunities await.
He has announced that they will also continue supporting micro, small and medium enterprises through their highly-concessionary loan packages. He says in addition to the $30 million set aside for this initiative last year, they are adding an additional $30 million this year.
Sayed-Khaiyum says in line with the policy across the civil service, the retirement age for those working in municipal councils will be reduced from 60 to 55 in one year’s time.
The Association of Banks has agreed to defer loan repayments on a case by case basis up to December 31st 2020.
He says they are grateful for flexibility they have granted the families and business still bearing the worst of this economic fallout.
The Ministry of Education has been allocated $450.6 million for the next financial year.
This will see the continuation of free education and bus fare subsidy.
Salary increments for teachers who obtain new qualifications will now be approved and paid in the next financial year. Those pay rises will be backdated.
For TELS, government has made some policy changes to raise the qualifying standards for students and lower costs. For starters, only students who earn marks above 250 on their Year 13 exams will qualify.
Sayed-Khaiyum says they have also lowered TELS and Topper’s Scholarships available, among with some other belt-tightening measures. But he says to grant flexibility to those still paying back loans, TELS repayments will be suspended another year, until 31st December 2021.
The Ministry of Health and Medical Services is allocated $394.3 million in the 2020-2021 Budget.
A key focus of the Ministry of Health and Medical Services is to remodel health care service provision so as to maintain readiness to be able to contain future threats from the pandemic whilst ensuring better coverage and quality.
Sayed-Khaiyum says 223 intern nurses will be made full time, 40 midwives will be hired and 105 full time medical officers will be advanced.
Internships of doctors will be for 2 years.
Sayed-Khaiyum says multi storey strata housing projects are being planned throughout Viti Levu. Meetings are underway with IFC.
People who earn $50,000 or less and building their first home will be granted $30,000. They will get $15,000 if they buy their first home.
For those families earning above $50,000 annually, they can be granted $20,000 to build their first home or $5,000 to buy their first home.
Any companies which build buildings for government use, the duty will be waived on all the raw materials, machinery and equipment necessary for construction.
Sayed-Khaiyum says as Fiji’s growing film and television industry is being safely resumed, with beloved shows like Survivor set to continue, their exemptions of exceptional economic value are also safely bringing back vital jobs and money into the country, with more expected to follow.
He says they have received a number of applications that would breathe new life, and new jobs, across industries and sectors adding several high-net worth individuals have taken them up on their offer to “escape the pandemic in paradise”.
He further says they have even seen interest by a company looking to not only come to the country to resume operations, but publicly list on the South Pacific South Exchange; so there lies great potential for those looking to take advantage of existing incentives to list in Fiji and even base their headquarters here.
Sayed-Khaiyum has also announced that they are offering a 150 per cent tax deduction for companies who list corporate bonds on the South Pacific Stock Exchange, with another 150 percent deduction allowed on interest paid on corporate bonds. He says any interest income will also be tax exempt.
He says these innovative approaches can help capture massive market and investment opportunities.
He adds that just because it’s safe to travel doesn’t mean people will travel –– but if the deals are good enough, they will fill the planes.
Fiji's overseas missions in Washington DC, Seoul, Port Moresby, Brussels and Kuala Lumpur will be closed permanently.
He says for two straight seasons they have paid cane growers $85 per tonne – a value far above the world market price adding that last season’s guaranteed price will be paid.
Sayed-Khaiyum says but in the final third season of the arrangement, they are reducing the guaranteed price for cane from $85 to $70 adding all other support to cane growers will continue.
He adds once Fiji’s larger economic recovery gets underway, the bottom-line of the cane growers will be among their priorities.
Sayed-Khaiyum says they are offering a deal for the construction of new private hospitals and medical service centres.
He says if you build or upgrade a hospital, depending on your level of investment, you can be granted up to a 20-year tax holiday on your new hospital or up to a 60% tax deduction on your renovation works.
Sayed-Khaiyum adds that businesses who invest in new subdivision projects for both residential and commercial lots will not only have duties waived on construction inputs, they can access up to 60% in tax deductions. And any profit they make selling the newly developed lots will be tax exempt.
Sayed-Khaiyum says they have allocated funds for the construction of new modernised Police Stations in Nakasi, Nalawa, Nadi and Lautoka.
257 officers will be promoted and the Force will recruit 137 new officers.
$6 million has been allocated for reform and restructure of the Fiji Police Force.
A 150 percent tax deduction has been announced for hotels to hire local entertainers.
He says to keep things simple for the “telcos” and support the longstanding commitment to streamline the sector’s regulations, the data levy introduced last year and the telecommunications service licensing fee have been replaced with a single 2 per cent revenue-based telecommunications licence fee.
He adds half of a percent of that new, simplified fee will go into an existing trust fund set aside for the continued development of Fiji’s telecommunications industry, allowing Fiji to further cement its standing as the ICT hub of the Pacific.
Sayed-Khaiyum has told the people that the government is betting big during the largest economic contraction to come back and recover quickly.
He said that we are a COVID-19 contained country now but many of our important industries have been victims of the COVID-19 pandemic.
He says tourism revenues have been evaporated with 40 percent of our GDP gone.
Sayed-Khaiyum says one third of our workforce have either lost their jobs or are on reduced hours.
He says the economy is not only at stake now but also our children's economy.
The Minister for Economy stresses that we need to bring back jobs and reduce taxes particularly in tourism.
He says they cannot tax businesses like it’s a pre-COVID economy or act with false hope that we will return to one anytime soon.
He says to brace for the “new normal” they have announced Fiji’s biggest-ever tax cut –– a discount of hundreds of millions of dollars, with strategic incentives across age-old industries as well as new arenas –– such as manufacturing and assembly –– which nations are looking to relocate to price competitive locales.
He says this tax cut’s biggest savings are also targeted at tourism.
Sayed-Khaiyum also says that our comeback hinges on holding our place in the global economy.
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The CEO of Fiji Hotels and Tourism Association, Fantasha Lockington says they are delighted the Government has delivered by providing relief for both import and excise duties and tax surcharge.
Lockington says these will altogether reduce their overhead costs and allow them to create attractive packages which will in turn allow them to offer real value for money.
She adds when Fiji’s borders open, it will make Fiji far more competitive.
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| Revenue Policies | Customs Tariff Act |
Lockington says it’s great that the tourism industry is being recognised that it uses local entertainers and now they can get some incentive.
A 150% tax deduction is being offered to hotels and restaurants that use local entertainers.
Lockington says this is like icing on the cake as they had not expected that.
Opposition Leader Sitiveni Rabuka says we all have to be positive about the measurements that have been announced in the 2020/2021 National Budget.
Speaking to Fijivillage after the Budget Address, Rabuka says the main purpose of the budget is recovery and we will have to wait and see how much of the recovery can be made from the budget.
Rabuka says it is their job now to properly critique it and hopefully the nation can get behind them to achieve the ultimate goal which is to get the economy back.
Education Minister Rosy Akbar says while there has been a slight reduction in the free education grant, the focus will be making sure the quality of education is not compromised.
She says most of the programs will continue.
Akbar says she is also happy for the 13,000 plus teachers who will not be subjected to any pay cuts.
The Ministry of Education has been allocated $450.6 million for the next financial year.
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| Revenue Policies | Customs Tariff Act |
This will see the continuation of free education and bus fare subsidy.
Salary increments for teachers who obtain new qualifications will now be approved and paid in the next financial year. Those pay raises will be backdated.
For TELS, the government has made some policy changes to raise the qualifying standards for students and lower costs.
For starters, only students who earn marks above 250 on their Year 13 exams will qualify.
Minister for Economy Aiyaz Sayed-Khaiyum confirms that they have made allocations with respect to social protection programs like the Poverty Benefit Scheme with the anticipation that more people will fall through the cracks and will need that assistance due to the economic impact brought by the COVID-19 pandemic.
The Ministry of Women, Children and Poverty Alleviation has been allocated $159.0 million in the 2020-2021 National Budget.
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| Revenue Policies | Customs Tariff Act |
Sayed-Khaiyum says the Department of Social Welfare administers Fiji’s basket of social welfare programmes, which include the Poverty Benefit Scheme, the Child Protection Allowance, the Food Voucher Program, the Social Pension Scheme and the Bus Fare Subsidy for the elderly and people living with disabilities.
He says the ongoing review on the social protection programmes systems and processes will ensure that this assistance is well-targeted and administered in a transparent and accountable manner.
Sayed-Khaiyum says the department is equally committed to ensuring that these programmes do not create a culture of dependency, focusing efforts and energy on graduating individuals and families from “welfare to workfare”.
National Federation Party Leader Professor Biman Prasad says he is disappointed with the allocation made to agriculture, social welfare and fisheries in the 2020/2021 National Budget.
The Ministry of Agriculture is allocated $65.3 million in the 2020/2021 budget while in the last financial year, an allocation of $78.7 million was made.
The Fisheries Ministry received an allocation of $15.5 million in this year’s budget while the Ministry of Forestry was allocated $15.7 million in this year’s budget.
The Social Welfare Program under the Ministry of Women, Children and Poverty Alleviation was allocated $133 million in the 2019/2020 budget while allocation of $140.7 million has been made for this year.
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| Revenue Policies | Customs Tariff Act |
The Ministry of Women altogether was allocated $127.7 million in the last budget and this year it has been increased to $159 million.
Prasad says the focus has remained on the tourism industry adding that many families would be needing assistance from social welfare given the level of unemployment as an impact of the COVID-19 pandemic.
Prasad adds that he would have preferred a bigger allocation for the Ministry of Health to ensure that our health services are up to par.
The Ministry of Health has been allocated $394.3 million in this budget.
Minister for Tourism Faiyaz Koya says the government has done their part by reducing the Environment and Climate Adaptation Levy and Service Turnover Tax and it is now up to the resorts and hotels to do theirs.
Koya says the general complaint is cost of Food and Beverages being too high and this is the government doing its bit to ensure there is a drop in prices.
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| Revenue Policies | Customs Tariff Act |
Koya says the industry stakeholders need to look at that and say that the government has done its part and its now for us to do our part.
Minister for Economy Aiyaz Sayed-Khaiyum has announced in the 2020/2021 National Budget that the 6% Service Turnover Tax has been eliminated and ECAL or Environment Climate Adaptation Levy will go down from 10% to 5%.
President of Fiji Retailers Association, Vinay Kumar says the 2020/21 National Budget may be the biggest stimulus budget that we may have ever come across in modern history in Fiji.
Kumar says he has never seen such a big reduction in duties for 1,600 items since Fiji’s modern history.
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| Revenue Policies | Customs Tariff Act |
He says Fiji’s economy is now being reset.
Kumar adds the removal of business licenses is the best news he has ever heard because there was no standardisation of business licenses.
With the announcement that the Free Medicine Scheme will continue, Health Minister Doctor Ifereimi Waqainabete has assured that their staff will actively continue to go out and try and register the new people that meet the requirements for the scheme.
Waqainabete says they understand that there will be more vulnerable people that will need to be assisted due to the current circumstances.
The Ministry of Health and Medical Services is allocated $394.3 million in the 2020-2021 Budget.
2020-2021 Budget Resources| Address | Estimates | Supplement |
| Revenue Policies | Customs Tariff Act |
A key focus of the Ministry of Health and Medical Services is to remodel health care service provision so as to maintain readiness to be able to contain future threats from the pandemic whilst ensuring better coverage and quality.
Sayed-Khaiyum says 223 intern nurses will be made full time, 40 midwives will be hired and 105 full-time medical officers will be advanced.
Internships of doctors will be for 2 years.
As the Minister for Economy Aiyaz Sayed-Khaiyum has announced in the 2020/2021 National Budget that customs duty on 1,600 items and fiscal duty has been reduced to 5% and import excise tax on a range of white goods have been eliminated, the Fijian Competition and Consumer Commission says they will ensure that the benefits of this reduction will be passed down to the consumers.
FCCC CEO, Joel Abraham says they have a good relationship with businesses but they should not be mistaken as FCCC will come hard on traders who are unethical.
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| Revenue Policies | Customs Tariff Act |
He says they have a system of enforcement but there will be some legislative changes providing specific provisions to empower FCCC.
Meanwhile Sayed-Khaiyum has also announced that residential rent is also VAT exempt.
Abraham says they will make sure that such exemption is also reflected by the reduction where VAT has previously been charged.
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