Fiji Property Investment Guide - JLL · Fiji has entered into double tax agreements with the...

Fiji Property Investment GuideHospitality Edition | 2014

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Property Tenure/OwnershipThree types of tenure exist:

Freehold land - estate in fee simpleApproximately 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 estateApproximately 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 LegislationThe 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 CorporationsForeign 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.

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Other relevant activities are ‘reserved activities’. Reserved activities are reserved for Fiji citizens only, and foreign investors cannot engage in those activities.

Foreign Investment IncentivesForeign 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 OwnershipThere 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 ControlsFiji 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 EstateThere 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 DutyStamp DutyStamp 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 TaxCapital 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 ‘zero-rated 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 TaxesTax DepreciationA deduction is allowed for annual depreciation on buildings.

The standard annual depreciation rate is calculated in accordance to the effective life of the asset.

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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 TaxOwners 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

Social Responsibility Tax FJD

0–270,000 20% Nil

270,001–300,000 USD 54,000 + 20% of excess over USD 270,000

23% of excess over USD 270,000

300,001–350,000 USD 60,000 +20% of excess over USD 300,000

USD 6,900 + 24% of excess over USD 300,000





450,001–500,000 USD 90,000+ 20% of excess over USD 450,000


500,001–1,000,000 USD 100,000 + 20% of excess over USD 500,000


1,000,001 + USD 200,000 + 20% of excess over USD 1,000,000

USD 197,900 + 29% of excess over USD 1,000,000

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

Social Responsibility Tax FJD

0–16,000 Nil Nil

16,001–22,000 7% of excess over USD 16,000

Nil

22,001–50,000 USD 420 +18% of excess over USD 22,000

Nil


Nil

270,001–300,000 USD 49, 460 + 20% of excess over USD 270,000

23% of excess over USD 270,000

300,001–350,000 USD 55, 460 +20% of excess over USD 300,000






450,001–500,000 USD 85,460+ 20% of excess over USD 450,000


500,001–1,000,000 USD 95, 460 + 20% of excess over USD 500,000


1,000,001 + USD 195,460 + 20% of excess over USD 1,000,000

USD 197,900 + 29% of excess over USD 1,000,000

Tax Treaties - Avoidance of Double Taxation Fiji has entered into double tax agreements with the following countries:

United KingdomNew ZealandJapanAustraliaKoreaMalaysiaPapua New GuineaSingaporeUnited Arabs Emirates (signed but not gazetted)

Real Estate Investment TrustsFiji does not have any legislation for real estate investments trusts.

Fiji Property Investment Guide 2014 5

Jones Lang LaSalle Level 25, 420 George Street, Sydney NSW 2000 tel +61 2 9220 8500 www.joneslanglasalle.com.au

Munro Leys Richard Naidu - Partner [email protected]

Nehla Basawaiya – Senior Associate [email protected]

Level 3, Pacific HouseButt StreetSuva, FijiPO Box 149Suva, Fuji tel +679 322 1813 +679 322 1848 fax +679 330 2672

www.munroleyslaw.com

© 2014 Jones Lang LaSalle. All rights reserved.All information contained herein is intended as guide only and does not constitute advice. It does not constitute any offer or part of any contract for sale, lease or otherwise. All details are approximate and have not been independently verified. Users should make their own enquiries to verify and satisfy themselves of all aspects of the information (including without limitation, any income, rentals, dimensions, areas, zoning and permits). While the information has been prepared in good faith and with due care, no representations or warranties are made (express or implied) as to the accuracy, currency, completeness, suitability or otherwise of such information. Jones Lang LaSalle, its officers, employees, subcontractors, agents and clients shall not be liable to any person for any loss, liability, damage or expense arising directly or indirectly from or connected in any way with any use or reliance on such information. The whole or any part of this document must not be reproduced without written consent from Jones Lang LaSalle.

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