SUNBIZ

Tax & You

The Minister, for Finance Aiyaz Sayed-Khaiyum, in his 2016 National Budget address announced a reduction in provisional tax rate on income from the performance of contracts for services, from 15
19 Dec 2015 10:24
Tax & You

The Minister, for Finance Aiyaz Sayed-Khaiyum, in his 2016 National Budget address announced a reduction in provisional tax rate on income from the performance of contracts for services, from 15 per cent to 5 per cent effective from January 12016.

This tax is applicable on the gross contractual payments, including progress payments under a contract.

According to Fiji Revenue and Customs Authority acting chief executive Visvanath Das said: “Provisional tax is applicable on professional services, know-how payments, payment for the management, supervision or supply similar activities.  Examples include contract for constructing a building where progressive payments are made, office cleaning, grass cutting, transportation and other similar contracts.

“However, it doesn’t apply to normal purchases of goods, rental agreements etc. Example of a contract and a normal supply, as follows:

“If an Organisation engages a Taxi when needed to transport its Staff on normal basis, there will be no Provisional Tax due. However if the Company has an agreement with the Taxi Operator for the transport of its Staff, with other clauses, then this would constitute a “Contract for Service” and therefore fiver per cent Provisional Tax should be deducted from the Gross payment.

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