Tax policies are constantly changing, and the new application of Fringe Benefit Tax to electric vehicles (EVs) starting January 1, 2025, is just one part of a broader tax framework. This perspective was shared by Deputy Prime Minister and Minister for Finance Biman Prasad in response to concerns raised by the private sector regarding the government’s decision to tax EVs.
Prasad emphasized that tax policies evolve and that the government recognizes its role in climate mitigation. He reiterated the importance of adaptation in Fiji, noting that the country contributes only a minuscule percentage to global emissions. He stated, “We’re not the polluters in the world. Fiji and the Pacific contribute a very, very minute percentage of the total global emission.”
Under the new tax structure, companies will face a Fringe Benefit Tax of up to $16,000 per year for EVs priced below $60,000, and more than $20,000 for those exceeding that price point. However, if the EVs are used partly for employment purposes, these amounts will be reduced by half.
Textile merchant Mark Halabe has expressed concern that this taxation could deter companies from investing in EV fleets, which are crucial for promoting clean energy initiatives. He hopes that there will be a review of this taxation in the next budget cycle to address these concerns.
Despite these concerns, Mr. Prasad confirmed that there are no plans for a review of the new tax anytime soon, emphasizing that it is just one component of a comprehensive approach to renewable energy and emission reduction. He highlighted that Fiji already sources 55% of its energy from renewable resources and is actively supporting solar power initiatives.
Mr. Prasad concluded by expressing optimism for future adjustments to tax policies and incentives that will further support renewable energy efforts in the country.
This situation highlights the balancing act governments face in fostering renewable energy adoption while also managing tax revenue. By actively supporting renewable energy initiatives, Fiji demonstrates a commitment to a greener future, even as it navigates the complexities of tax policy.
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