Fiji’s Tax System Overhaul: Can SMEs Adapt to New Changes?

The Fiji Revenue and Customs Service (FRCS) is preparing for the next phase of its Value-Added Tax Monitoring System (VMS) amid identified challenges, particularly for Small and Medium Enterprises (SMEs). During a recent post-budget symposium, concerns were voiced regarding system compatibility and the financial burdens of past implementations that SMEs faced.

FRCS CEO Udit Singh acknowledged these issues, attributing part of the challenge to Fiji’s large shadow economy. This has prompted a decision to lower the VMS threshold in an effort to formally integrate more businesses into the digital economy. To facilitate this transition, the FRCS is developing a free, or low-cost, point-of-sale system specifically designed for smaller enterprises.

Finance Minister Professor Biman Prasad confirmed that the government had paused the second phase of the VMS rollout, listening to the concerns expressed by the business sector. He assured that with FRCS’s preparations in place, the rollout is expected to proceed more smoothly, reinforcing that while the VAT threshold remains the same, the VMS threshold has been adjusted.

In tandem with the VAT discussions, Prof Prasad also touched upon the necessity of diversifying Fiji’s food supply chain. He highlighted the rising import costs from traditional suppliers such as Australia and New Zealand and pointed out the need for modernizing outdated biosecurity regulations that hinder direct imports from essential markets like India. The goal, according to Prof Prasad, is to ensure fair pricing and local industry support while combatting rising costs.

The overall approach emphasizes a strategy of reform and modernization in both trade and tax systems, aimed at nurturing businesses and consumers alike during challenging economic conditions. These measures reflect a commitment to enhancing operational frameworks and fostering economic resilience among Fijian businesses.

This ongoing dialogue and preparation indicate a positive direction for Fiji’s economy, aiming to engage businesses proactively while addressing the pressing issues of tax compliance and cost management. The collaborative efforts from both the government and private sectors are essential to navigating the challenges ahead and stimulating growth and stability in the economy.