Fiji Property Investment Guide Hospitality Edition 2014
FIJI Property Tenure/Ownership Three types of tenure exist: Freehold land - estate in fee simple Approximately 6% of land in Fiji is freehold land. Freehold land can be purchased, transferred or leased freely by the residents of Fiji. Nonresidents need to obtain the consent of the Minister of Lands under the Land Sales Act if they: purchase or lease more than 1 acre of freehold land from a resident; purchase or lease any freehold land from a resident when the area of this land is aggregated with any other land already held by a non-resident of Fiji and when the total area of both lands exceeds 1 acre; and purchase freehold land of any size from another nonresident. State land leasehold estate State land is vested in the Director of Lands on behalf of the State. Approximately 7% of land in Fiji is State land. All foreshore lands beyond the mean high water mark and all soil under Fiji waters and the beds of navigable rivers and streams are state land. Leases over State land are granted for terms of 30 99 years. Any dealing with State land requires the prior written consent of the Director of Lands. Non-residents need to obtain the consent of the Minister of Lands under the Land Sales Act if they: purchase or lease more than 1 acre of State land from a resident; and purchase state land of any size from another non-resident. itaukei land leasehold estate Approximately 87% of land in Fiji is itaukei land. itaukei land is administered and held by the itaukei Land Trust Board ( itltb ). Leases over itaukei land are granted for terms of 30 99 years. Any dealing with itaukei land requires the prior written consent of the itltb. The consent of the Minister of Lands under the Land Sales Act is not required for the sale or disposition of itaukei land. All mineral rights are reserved to the State, with a constitutional provision to ensure that the owners of the land (customary or freehold) receive a fair share of royalties paid to the State. All land in Fiji is registered under the Torrens system of land registration. Major Property Legislation The major property legislation in Fiji is: Property Law Act Cap. 130; Land Transfer Act Cap. 131; State Lands Act Cap. 132; itaukei Land Trust Act Cap. 134; itaukei Lands Act Cap. 133; State Acquisition of Lands Act Cap. 135; Land Sales Act Cap. 137; Constitution of the Republic of Fiji 2013; and Land Use Decree No. 36 of 2010. Operational Requirements for Foreign Corporations Foreign companies can establish a place of business in Fiji. If they wish to do so, they must register themselves with the Registrar of Companies under the Companies Act within 30 days of establishing a place of business within Fiji by providing the Registrar of Companies with: constituent documents (i.e., by-laws, constitution and articles of association); list of directors; statement of charges created by it in relation to any of its property in Fiji; name and postal address of local agent; and registered address of the company in Fiji. For some foreign companies, there are annual reporting requirements as well as ongoing obligations to report changes. A new Companies Decree has been proposed to replace the Companies Act. The proposed Companies Decree is not yet enacted. Under the proposed Companies Decree, there would be more reporting and disclosure requirements for foreign companies registered in Fiji. Foreign Investment Regulation Foreign investors who wish to carry on business in Fiji in a relevant activity must obtain a Foreign Investment Registration Certificate from the relevant government authority under the Foreign Investment Act (Investment Fiji). Relevant activities are listed in the Fiji Standard Industrial Classification ( FSIC ). It includes: real estate development; real estate management; and ownership of apartments/villas that are used to derive income in Fiji. Certain relevant activities are defined as being restricted activities. Depending on the activity, such restricted activities have varying degrees of capitalization/cash injection into Fiji requirements. For example: USD 2.7 million (FJD 5 million) for real estate development; and USD 137,727 (FJD 250,000) for ownership of tourism-related accommodation. 2
Other relevant activities are reserved activities. Reserved activities are reserved for Fiji citizens only, and foreign investors cannot engage in those activities. Foreign Investment Incentives Foreign investors are eligible for the following tax and duty incentives: Hotel Industry incentives for development of hotels, including integrated villa development Audio Visual incentives Agriculture incentives Tax Free Region incentives ICT incentives Customs duty incentives for manufacturers Fiji My Second Home incentive incentives for former Fiji citizens/residents to own properties in Fiji Export incentives Restrictions on Foreign Property Ownership There are no general rules restricting or prohibiting foreigners from owning a property in Fiji. However, foreigners who wish to own land will need the consent of the Minister of Lands, Director of Lands or itltb, depending on the land tenure (see above). Foreign Exchange Controls Fiji maintains a fairly stringent exchange control regime under the Exchange Control Act Cap. 211 ( ECA ). The ECA does not permit Fiji residents to hold currency abroad. The export of currency abroad by Fiji residents is also restricted. The Reserve Bank of Fiji gives consent to the issue and transfer of securities (loans, shares and bonds) between residents and nonresidents. Taxes on Possession of Real Estate There is no property tax for owning property in Fiji. Property owners are responsible for local town or city rates/levies for street lighting, garbage collection, etc. Taxes on Acquisition/Taxes on Transfer of Real Estate/Stamp Duty Stamp Duty Stamp duty at 3% of the consideration (or market valuation if the property is not being transferred on an arm s length basis) is payable by the transferee of real estate. An individual purchaser is eligible to obtain conditional exemption from payment of stamp duty where the Commissioner of Stamp Duties is persuaded that the individual applicant intends to: reside in any existing dwelling house on the property; or build and occupy a dwelling house on the property for a period of at least five out of the following ten-year period. Capital Gains Tax Capital gains tax at 10% is imposed on a person who has made a capital gain from the disposal of a capital asset, such as: land; an option; and a right or other interest in land. Capital gains tax is not payable where the capital gain is made: by a Fiji resident and the capital gain does not exceed USD 10,916 (FJD 20,000); in relation to a disposal of a Fiji resident s principal place of residence; and from the disposal of an asset that is used solely to derive income exempt from tax under the Income Tax Act. Value Added Tax ( VAT ) VAT at 15% is charged on the supply of goods and services made by a registered person in the course or furtherance of a taxable activity. Certain supplies that are classified as exempt supplies or zerorated supplies do not attract VAT or attract VAT at 0%. Registration is optional if supplies do not exceed USD 54,410 (FJD 100,000) in any 12-month period. A registered person under the Value Added Tax Decree 1991 who is selling real estate in the course of or furtherance of a taxable activity (e.g., a land developer) is required to collect VAT at 15% from a purchaser. If the purchaser is also a registered person, he or she may be able to claim an input credit and obtain a refund of the VAT paid by him or her. Generally, retail residential property sales do not attract VAT, but this is not because of the fact that the property is a residential one, but because most residential property vendors are not registered persons for VAT. Applicable Taxes Tax Depreciation A deduction is allowed for annual depreciation on buildings. The standard annual depreciation rate is calculated in accordance to the effective life of the asset. Fiji Property Investment Guide 2014 3
FIJI Assets are subject to depreciation rates from 2.5% to 50%. A loading of 20% can be applied to the broad brand rate. New buildings constructed before 31 December 2014 are qualified for an accelerated depreciation allowance at 20%. Service Turnover Tax Owners of villas, apartments or homes that are rented out to tourists, international students or overseas visitors and whose annual turnover exceeds USD 27,105 (FJD 50,000) are required to account for Service Turnover Tax at 5% in addition to income tax and VAT. Corporation Tax Companies (including companies acting as trustees) are subject to the following tax rates: nonresident shipping companies 2% any company listed with the South Pacific Stock Exchange with a minimum of 40% resident shareholders 18.5% a nonresident company that establishes or relocates its regional or global headquarters to Fiji 17% all other companies 20% Personal Taxes Nonresidents As at 1 January 2013, the rates for personal income tax for nonresidents in Fiji are as follows: Chargeable Income FJD Income Tax Payable FJD 0 270,000 20% Nil 270,001 300,000 USD 54,000 + 20% of 300,001 350,000 USD 60,000 +20% of 350,001 400,000 USD 70,000 +20% of 400,001 450,000 USD 80,000 + 20% of 450,001 500,000 USD 90,000+ 20% of 500,001 1,000,000 USD 100,000 + 20% of 1,000,001 + USD 200,000 + 20% of Social Responsibility Tax FJD 23% of USD 6,900 + 24% of USD 18,900 + 25% of USD 31,400 + 26% of USD 44,400 + 27% of USD 57,900 + 28% of USD 197,900 + 29% of Residents As at 1 January 2013, the rates for personal income tax for Fiji residents on their worldwide income are as follows: Chargeable Income FJD Income Tax Payable FJD 0 16,000 Nil Nil 16,001 22,000 7% of USD 16,000 22,001 50,000 USD 420 +18% of USD 22,000 50,001 270,000 USD 5,460 +20% of USD 50,000 270,001 300,000 USD 49, 460 + 20% of 300,001 350,000 USD 55, 460 +20% of 350,001 400,000 USD 65,460 +20% of 400,001 450,000 USD 75,460 + 20% of 450,001 500,000 USD 85,460+ 20% of 500,001 1,000,000 USD 95, 460 + 20% of 1,000,001 + USD 195,460 + 20% of Social Responsibility Tax FJD Nil Nil Nil 23% of USD 6,900 + 24% of USD 18,900 + 25% of USD 31,400 + 26% of USD 44,400 + 27% of USD 57,900 + 28% of USD 197,900 + 29% of Tax Treaties - Avoidance of Double Taxation Fiji has entered into double tax agreements with the following countries: United Kingdom New Zealand Japan Australia Korea Malaysia Papua New Guinea Singapore United Arabs Emirates (signed but not gazetted) Real Estate Investment Trusts Fiji does not have any legislation for real estate investments trusts. 4
Munro Leys Richard Naidu - Partner richard.naidu@munroleyslaw.com.fj Nehla Basawaiya Senior Associate nehla.basawaiya@munroleyslaw.com.fj JLL Level 25, 420 George Street, Sydney NSW 2000 tel +61 2 9220 8500 www.jll.com.au Level 3, Pacific House Butt Street Suva, Fiji PO Box 149 Suva, Fuji tel +679 322 1813 +679 322 1848 fax +679 330 2672 www.munroleyslaw.com Fiji Property Investment Guide 2014 5
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