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Fiji Revenue And Customs Authority: Tax And You

Credit Cards are often seen in Fiji as a luxury for the rich but increasingly, the middle income earners have started using them. What is important for every credit card
29 Aug 2015 10:30
Fiji Revenue And Customs Authority: Tax And You
This week's focus is on Credit Card Levy.

Credit Cards are often seen in Fiji as a luxury for the rich but increasingly, the middle income earners have started using them.

What is important for every credit card holder to be aware of is that the money used from the credit card has to be repaid.

A credit card doesn’t make the money in it your own but moreso a loan which you can use used for whatever purpose but has to be repaid.

With the increasing internet penetration, a lot of sale now happens online.

And many of the sites needs the buyers to use credit cards to make their purchases.

Increasingly, even in Fiji a lot of internet sales have begun to take place and therefore more and more people are starting to sign up for credit cards.

But every credit card holder in Fiji is subjected to Credit Card Levy.

We interviewed the Fiji Revenue and Customs Authority chief executive, Jitoko Tikolevu, to inform our readers of the Credit Card Levy.

 

UNDERSTANDING CREDIT CARD LEVY


What is Credit Card Levy?
 All bank customers holding local credit cards will have to pay an additional two per cent charge on the outstanding balance of their credit card accounts at the end of each month. Credit Cards are those that are issued by Financial Institutions in Fiji.

 

Does this apply Levy to Foreign Credit Cards used here in Fiji?
No this is only applicable to Credit Cards issued here in Fiji by Financial Institutions in Fiji.    

 

How is the Levy calculated?
The levy is computed on the debit balance that remains unpaid at the end of the due date for payment in a billing cycle. The amount owing refers to the overdue amount plus the bank’s administrative charges such as fees and interest penalty for late payment.

 

How do you avoid paying the Credit Card Levy?  

To avoid paying the Credit Card Levy, the credit card holders must  ensure to clear any debit balance that remains unpaid at the end of the due date for payment in a billing cycle. This also includes the overdue amount plus the bank’s administrative charges such as fees and interest penalty for late payment.

 

Who is liable to pay the levy?
The Credit Card Levy is imposed on the holder of a bank credit card under Section 7G of the Income Tax Act 1974.

 

Who is exempted from the levy?  

Exemptions will apply to foreign credit card balances for diplomats and non-citizens who are exempted under the Diplomatic Privileges and Immunities Act. However, local credit card balances for credit cards issued locally, will not be exempted from the levy.

 

Who is responsible for the collection and payment of the levy?   

The bank shall be liable for the collection and payment of the levy which is due on or before the 15th of the following month. The payment should accompany the related return that is due on the same day.

 

Some consumers have complained that they have been overcharged of the Levy since its change in 2013. How come?   

This is in relation only to the year 2013.  The issue arose from the fact that the banks have had to change their system later in the year to accommodate the change. In 2012 there was different method of calculating the Levy. The Levy was computed on any amount debited during the month and which remained unpaid at the end of each month, whether overdue or not, however, in 2013, the Levy is computed on the debit balance that remains unpaid at the end of the due date for payment in a billing cycle. The amount owing refers to the overdue amount plus the bank’s administrative charges such as fees and interest penalty for late payment.  We have been consulting the banks and Reserve Bank of Fiji on how best to resolve this issue and we are still in discussion.

Feedback: rachnal@fijisun.com.fj

 

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