A review of Value Added Tax (VAT) regime and the economic social implications of moving towards a single VAT rate when the time is appropriate is one of the guiding principles the Ministry of Finance, Strategic Planning, National Development and Statistics will consider between 2024 and 2027.
And the ministry says that based on the key policy measures implemented in the financial year 2023-2024 National Budget and revised economic growth projections, total Government revenue is now projected to increase to around 27 per cent of gross domestic product in the medium term, similar to pre-COVID levels.
This is stated in the Medium-Term Fiscal Strategy Financial Year 2024-2025 to Financial Year 2026-2027 that was tabled in Parliament recently. “Significant changes to tax rates have been implemented in the current budget,” states the ministry.
“Government must demonstrate its intention to ensure that the tax regime is kept stable and predictable, to allow investors and consumers to plan with confidence.
“This means there is little opportunity for subsequent changes in tax rates in the near to medium-term.
“The focus therefore will shift towards improving compliance through tax education and self-regulation, streamlining and re-evaluating some of the tax exemptions and incentives and putting in strategies to counter deliberate tax evasion and avoidance.”
The ministry has highlighted several guiding policy principles in the medium term.
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- • Explore broadening of the tax base with better targeting of current exemptions and other distortions and bringing in provisions to collect revenues from e-commerce transactions.
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- • Review, in consultation with the business community, the wide range of current tax incentives with a view to eliminating those that are unnecessary and re-orienting others to ensure better targeting in line with current economic and social policy goals (for example, low-cost housing, renewable energy, and environmentally sustainable tourism).
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- • Improve tax compliance and collection of tax arrears and implement a dividend tax (in keeping with the Fiscal Review Committee recommendations) both as a revenue-raising measure and to improve equity in the tax system.
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- • Review the VAT regime and the economic social implications of moving towards a single rate when the time is appropriate.
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- • Review the departure tax as part of an ongoing strategy of balancing Government revenues from tourism, in consultation with the tourism industry (and ensuring that significant changes are clearly signalled).
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- • Engage with the European Union on necessary changes to the tax regime to ensure that Fiji is removed from its international tax ‘blacklist’; and
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- • Frame a clear and consistent policy on customs and excise measures to ensure stability and predictability for importers and taxpayers and review non-tax revenues on a cost recovery basis while also ensuring that the vulnerable and disadvantaged are protected.
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