ADB 2019: Speak Out Pacific Leaders; Do Not Be Bullied by the EU

ANALYSIS: Pacific Island finance lead­ers who are part of the 52nd Asian Development Bank annual governors meeting should take time out to seriously discuss and denounce the European Un­ion’s decision to blacklist Fiji.

The heavy handed manner in which EU has dealt with Fiji is something that can easily happen to any of the Pacific Island coun­tries.

The European Union has not been so heavy handed with other devel­oped nations, including those na­tions who have tax policies very similar to Fiji.

In fact some of the tax policies of these developed countries have been taken on board by Fiji. If the Pacific Island nations fail to speak up today, they may very well be on the receiving end of this heavy handedness from EU.

Numbers matter and instead of dealing with this issue in isolation, the Pacific Island members need to speak out in one voice. The ADB annual governors meeting has pro­vided the perfect platform for this to happen and this needs to happen.

The Attorney-General Aiyaz Sayed-Khaiyum had not minced his words when he spoke in Parlia­ment about how EU had dealt with Fiji. He did not sugar coat the issue and highlighted the areas where EU should have consulted Fiji and failed to do so.

He had labeled the European Un­ion bullies for putting Fiji on their tax haven blacklist adding that un­der the guise of tax co-operation, the EU has particularly picked on smaller and weaker countries whose domestic tax policies are naturally geared toward economic growth.

What will stop the EU from em­ploying similar tactics when deal­ing with our Pacific neighbours? Nothing if the Pacific leaders do not speak out now.

The EU wants Fiji to remove:

• The 50 per cent export income tax reduction concession that is provided to Fijian export­ers. If, for example, a Fijian company makes noodles and if that company exports noo­dles to Papua New Guinea, Solomon Islands, Vanuatu or any part of the world, then it gets a 50 per cent export in­come deduction. Close to 200 Fijian companies benefit from this, including FMF and vari­ous other companies which employs hundreds of people. This was put in place to incen­tivise exports;
• Fiji offered a 17 per cent cor­porate tax rate on the relo­cation of global or regional headquarters to Fiji. If com­panies move their regional or global headquarters to Fiji then they get a 17 per cent tax reduction. So far, one com­pany has taken advantage of that which is ANZ. ANZ moved its regional headquar­ters from Melbourne to Fiji. The move also means real es­tate is rented out for the head­quarters, residences are hired for expats working in the com­pany and more jobs for locals;
• The EU wants Fiji to remove the ICT (Information and Communications Technol­ogy) incentive. Today, we have over 500,000 smartphone us­ers in Fiji and 50 per cent of our population is below the age of 27. We have 1million sim cards in operation at the moment in the country. We are technologically very savvy. Government believes there are a lot of opportuni­ties and a lot of jobs in this sector. They have said that if an ICT company comes and sets up business here, em­ploys more than 50 people and exports more than 60 per cent of its services, they will get a 13-year tax holiday. Compa­nies such Mindpearl and RCL are all here. They created up to 300 jobs, some operate 24 hours.

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