The Fiji Revenue and Customs Service (FRCS) will introduce a mandatory asset declaration framework for sole traders from the next financial year as part of efforts to tackle unexplained wealth and strengthen tax compliance.
Appearing before the Standing Committee on Economic Affairs yesterday, FRCS Chief Executive Officer Udit Singh confirmed the authority is establishing a dedicated unit to monitor unexplained wealth.
“We are actively setting up a unit to actually look at that, and there will be an asset declaration form that will come out for sole traders,” Mr Singh said.
He said sole traders would be required to disclose their assets and explain how they acquired them.
“That means that if you’re a sole trader, you’ll need to fill those forms in for those assets, and you’ll have to be able to advise us where and how those assets were derived from your income, and if you’ve paid tax on your income.”
FRCS Director Corporate Shavindra Nath said while the formal asset declaration framework is expected to take effect from the next fiscal year, existing tax laws already provide FRCS with powers to question assets that appear inconsistent with a taxpayer’s declared income.
“Whilst we are implementing the asset declaration framework, which should be effective from the next fiscal year, our tax laws already give us powers,” Mr Nath said.
He explained that where an audit identifies profits or assets that are not consistent with a taxpayer’s income or earning capacity, the taxpayer must account for how those assets were obtained.
“If there is an audit conducted on a taxpayer, and we identify that the profits derived or the assets accumulated is not parallel to what the taxpayer is earning or his ability, the onus is on the taxpayer to tell us how that asset has been obtained.”
Mr Nath said if a taxpayer is unable to demonstrate that an asset was acquired legitimately, FRCS can take further action under existing legislation.
“If the taxpayer is not able to tell us that that particular asset was obtained legitimately, then there can be some tax implications on it.”
He stressed that any action taken by FRCS would only occur after appropriate checks and balances had been completed.
The proposed asset declaration framework is expected to strengthen FRCS’s ability to detect tax evasion and ensure individuals accurately declare income used to acquire significant assets.
