A new tourism tax is causing the feeling of disdain among brides in social media groups and forums. So what’s it for, who does it apply to, when does it come about and is there a way to avoid it?
Here’s what we know. There are a number of misleading reports suggesting Fiji’s Value Added Tax (VAT) is increasing next year, when in fact it is dropping from 15% to 9%. The VAT is the island nation’s largest revenue earner for Government. In 2014, it amassed FJD$737 million (38% of the government’s total revenue) and that is projected to rise to FJD$817 million this year.
Due to the decrease in VAT, revenue is tipped to fall below FJD$800 million in 2016. All tourism, travel and tour product and service providers in Fiji are required to collect a Service Turnover Tax (STT) – a tax that is levied on the VAT. Currently the STT is 5% and last year racked in FJD$58 million. For 2015, due to a number of factors including increased visitor arrivals, Fiji is expecting that figure to jump to FJD$64.8 million.
In November, the Fiji Government released its 2016 Budget, at which time it confirmed the STT would be jacked up to 10%, effective 1 January 2016, projecting the 2016 collection figure would be in the vicinity of a whopping FJD$126.8 million.
A new Environmental Levy at a rate of 6% would also be introduced.
Previous thresholds on some Fiji businesses such as restaurants, water sport suppliers and accommodation dwellings would be removed.
Ultimately, hotels, resorts, tour operators and other travel & tourism service operators will be required to pay the Fijian Government the higher tax from the start of 2016. They in turn have to pass that levy on.
Some Australian travel companies with Fiji bookings that have yet to be paid in full have been forced to charge their clients for the extra levy. Others are choosing to absorb the difference by way of an “amnesty” on a case-by-case basis.
At the end of the day, Fiji’s STT is going up and a new environmental tax is coming. While it is an inconvenience and throws out bridal party budgets, the fact remains getting hitched in Fiji is aw far more affordable than in most Australian capital cities!