The Fiji Revenue & Customs Service(FRCS) continues to work in partnership with stakeholders, businesses, companies, non-profit bodies and the general public through effective awareness programmes.
The On-going awareness programme by FRCS aims to ultimately maximise voluntary compliance.
The Service continues to create awareness on tax and customs related topics to assist taxpayers to better understand their obligations with respect to Customs and Taxation matters.
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Employer Registration for Tax Purposes
All employers are required to be registered in FRCS for tax purposes.
This basically means that where individuals are being employed by a particular employer - it is the duty of the employer to ensure that they are registered as an employer with FRCS.
For sole-trader businesses, they are required to complete Section A and E of the Application for TIN Registration of Salary/Wage Earners/Sole-Trader Business Form (IRS001).
For Non-individuals like Partnership, Company, Non-Profit bodies, they are required to complete Section A and D of the Application for New or Changes to Registration of Companies, Partnerships, Trust or Estate (IRS003).
The registration as an employer then provides legal authority to deduct applicable taxes from the income of employees that are required to pay tax.
Taxes like Pay As You Earn(PAYE), Social Responsibility Tax(SRT), Environment & Climate Adaptation Levy (ECAL) are deducted from employment income.
FRCS has noted the increasing number of employers that are not registered as an employer with the tax office despite the fact that they employ people. Non-deduction of taxes will become an Offence by the Employer.
On the other hand, there are employers who continue to deduct taxes and not remitting to FRCS - this is equally an offence as the taxes deducted become Trust funds! Fiji Revenue & Customs Service will ensure that Employers are penalised for not remitting taxes that have been deducted from the income of employees.
Fiji Revenue & Customs Service urges all employers to ensure that proper registrations are done with FRCS at the point of becoming an employer.
Employee Tax Code Declaration
Employers must ensure that all employees complete an Employee Tax Code Declaration form and submitted for the Employers record.
This includes both new and existing employees.
For new employees, employers must ensure that the Employee Tax Code Declaration form is completed by the employee at the point of entry to employment.
Employers must ensure that all employees declare their correct tax code for tax purposes.
Where employees have only one orprimary source of employment then employer must ensure that employees declare this by ticking Code “P” on the form.
Employees who have more than one source of employment will declare Code “P” in his first or primary employment and code “S”for their secondary employment.
Employer Obligation on Tax Withheld from Employment Income
The principal duty of Employers when withholding tax such as PAYE, SRT and ECAL is to ensure that they deduct the “CORRECT” amount of tax on the income of the employee.
This is the number one responsibility of any Employer that is required to withhold PAYE from employment income.
This is in line with having PAYE as a Final tax. Fiji Revenue & Customs Service wants to urge Employers to ensure that they deduct the correct amount of PAYE, SRT and ECAL at all times.
Employers of High Income Earners
Employers are required to register for Social Responsibility Tax (SRT) with FRCS if an employee is paid an annual Salary that exceeds $270,000 per annum.
Social Responsibility Tax is levied on the excess income of $270,000 hence employers are urged to ensure that correct SRT deductions are made.
Employers are also required to deduct Environment & Climate Adaptation Levy(ECAL) at the rate of 10 per cent from employees who earn above $270,000.00 per annum.
ECAL was introduced in the 2017/2018 national budget announcement and came into effect from August 1, 2017.
SRT and ECAL are parallel taxes that are applied togetherat different rates on the excess amount of $270,000.
Employers Providing Non-Cash Benefits to Employees
All employers that provide Non-Cash benefits to its employees are required to register for Fringe Benefit Tax purposes. Non-cash benefits are those benefits provided by the employer for the employee’s personal use.
Non-cash benefits include; Motor Vehicle, House, Mobile phone, Utility bills, School Fees etc.
These are some of the common non-cash benefits that are provided by employers to its employees.
Non-cash benefits provided by the Employer to the employee is subject to 20 per cent Fringe Benefit Tax(FBT) and is payable by the employer.
In other words, although it is a benefit to the employee – the employer is liable to pay Fringe Benefit Tax on the value of the benefit.
Fiji Revenue & Customs Service has noted that some employers provide non-cash benefits to their employees but are not paying Fringe Benefit Tax at all.
This is a concern to the tax office and FRCS urges all employers providing non-cash benefits to their employees to correctly account for FBT and ensure that payments are made accordingly before the due date.
Employers that provide non-cash benefits to employees are required to file FBT returns and pay FBT within one month after the end of the quarter.
Table 1 shows the due dates for filing of FBT Returns and FBT Payments.
Employers must also understand that cash benefits paid directly to employee income is subject to normal PAYE Tax.
Employer Monthly Schedules
All employers are required to lodge an Employer Monthly Schedule, even if they do not pay wages in a particular month or the wages paid to employees do not attract PAYE Final tax because all their employees’ incomes are below the tax threshold of $30,000.
This is a mandatory requirement for ALL employers to submit to FRCS and Employers must ensure that EMS files are lodged monthly. Table 2 shows an example of how EMS files will be lodged on a monthly basis for the year 2018.
Employers must provide FRCS with their correct employees’ details in the Employer Monthly Summary.
Failing to provide the correct details is a serious offence and can result in the employer being prosecuted and penalised in accordance with the Tax Administration Act 2009.
All Employers that have outstanding EMS’s for the past years are encouraged and urged to ensure that past years EMS’s are filed correctly to FRCS.
Late Lodgment of EMS’s made by the Employer will be subject to 20 per cent Late Lodgment Penalty on the outstanding tax amount.
A $1 a day penalty is then applied thereafter for every day of default in lodgment.
Employer Six Monthly Schedules
Employers that find it difficult to lodge monthly EMS’s may opt to register for Six Monthly EMS with FRCS provided that there are no employees subject to PAYE deductions.
This is only an option to Employers that have all employees who are paid annual salaries that does not exceed $30,000.00. Submission method of the file will be through email and all files lodgment can be directed to: payeems@frcs.org.fj.
Employers must ensure that they receive an email notification from the PAYE platform within an hour upon sending EMS files. Employers must contact our PAYE Section where they have failed to receive notifications from FRCS.
The Employer Six Monthly Schedule is filed on a six monthly basis and the due dates for the Six Monthly EMS will be the last day of July for the period January – June and last day of January for the period July -December.
Table 3 shows the Due Dates for Lodgments for Employers who are registered under the Six Monthly EMS Lodgments.
Employers who have not lodged their Six Monthly EMS for the period of July to December 2017 are urged to ensure that they are lodged as it is already due.
Payment Obligations for Employers
Any PAYE, SRT or ECAL deducted from an employee’s income must be remitted to FRCS by the Employer on the month following the month the tax was collected. This is the payment obligation of all Employers registered in FRCS for PAYE purposes. Failure to pay PAYE, SRT or ECAL that has been withheld by the employer from an employee’s income is an offence under the Income Tax Act and is subject to penalties.
The tax office also notes that employers have a tendency of making late payments of PAYE, SRT and ECAL withheld.
This is deliberate and will be dealt with seriously by FRCS. Employers must understand that the taxes that they have withheld, belongs to the Government as Trust Funds.
Employers that are providing non-cash benefits must ensure that Fringe Benefit Tax is paid on or before the due date. Any Late Payment made by the Employer will be subject to 25 per cent
Late Payment Penalty on the tax amount due.
Employer Must Issue Tax Withholding Certificates
All Employers are required to issue a Tax Withholding Certificate to their employees at the end of a tax year regardless of whether PAYE was deducted from the employees income or not.
This is a requirement under the Income Tax Act and Employers must ensure that they abide by it.
Fiji Revenue & Customs Service has noted that some Employers do not issue a Tax Withholding Certificate at all to their employees at the end of the tax year.
Employees have the right to know every information of their income derived in a particular year hence it is the Employers duty to ensure that they are provided adequate information through this document. Withholding Certificates must be issued to all employees regardless of whether their income is subject to taxes or not.
For the Tax year 2017, Employers will be required to submit 2 sets of Withholding Tax Certificate.
This is to correctly declare the Income and taxes deducted in the periods January to July and August to December, 2017.
Partnership and Education
There is now an increased level of partnership between FRCS and its Stakeholders which is achieved through targeted awareness and educational forums.
FRCS has noted that through partnerships, it is an opportunity to educate taxpayers and assist them to clearly understand their obligations.
Fiji Revenue & Customs Service wishes to extend its advisory services to Employers that have tax related issues to contact us for assistance.
FRCS wants Employers to come on board and continue to partner with FRCS to improve voluntary compliance.
The Service wants to create an environment where employers are willing to come forward to comply with the tax laws.
Employers that are in need of assistance on their employer obligations can visit any of our FRCS offices for advice or email their request or queries on info@frcs.org.fj or payefinal@frcs.org.fj for assistance.
Fiji Revenue & Customs Service is committed to providing Employers quality service at the same time ensuring that Employers continue to comply with their tax obligations.
Feedback: maraia.vula@fijisun.com.fj
