The Income Tax (Withholding Tax) Regulations 2013 (Regulations) detail the responsibilities of employers with regards to the withholding of tax from employment income.
It was announced in the 2013 budget that PAYE would be a final tax - meaning, in effect, that those whose income comprised solely of employment income would not be required to file a tax return.
The Regulations, which were gazetted on Friday 22 November 2013:
- repealed the Income Tax (Employment) Regulations;
- had a commencement date of 1 January 2013; and
- provided employers and employees with a four month period (from the date of publication in the Gazette) to comply with the Regulations.
By way of Public Notice, the Fiji Revenue & Customs Authority has extended the deadline for the lodgement of PAYE FINAL Employer Monthly Summaries (EMS) from March 31, 2014 to April 30, 2014.
As an employer, here are some things you should know about deducting and paying PAYE:
Registration
The Regulations provide that an employer must register with FRCA within 30 days from commencement of the trade, business, profession or vocation, or be liable to a fine not exceeding $1000 or imprisonment of up to six months, or both. Registration is by way of IRS001 or IRS003.
There is no requirement for existing employers to re-register.
Employee Tax Code Declaration
An employee must file a tax code declaration (IRS458A) (TCD) with the employer within 5 working days from the commencement of employment. The TCD is not required to be lodged with FRCA.
If the employment is the employee's primary employment, the employee files a 'P' TCD. If the employment is the employee's secondary employment, the employee files an 'S' TCD. The Regulations set out the various formulae for the deduction of tax in 'P' and 'S' categories.
As an employer, if you do not receive a TCD from your employee within the 5 days, you must deduct tax at the rate of 20%.
An employee with one or more 'secondary employments' may apply to FRCA for a Special Tax Rate.
Redundancy
The withholding tax rates under section 17A of the Act continue to apply to redundancy payments.
Monthly Responsibilities
Taxes withheld by an employer for a month must be paid to FRCA and accompanied by a Remittance Advice Slip (prescribed FRCA form) by the end of the month following the month for which the deductions relate. The employer must submit an EMS in the approved electronic format.
In the event the employer pays an employee an amount that is likely to increase or decrease the amount of withholding tax to be remitted to FRCA, an employer may make the necessary adjustments during a payment period during the tax year.
Non-resident employees
Employers must deduct PAYE FINAL from wages paid to non-resident employees in the same way as for resident employees. However, there are non-resident tax rates that apply to non-residents. The most up-to-date non-resident tax rates are available on the FRCA website.
A resident, as defined under the Act, means a person, other than a company, who resides in Fiji, and includes a person—
- whose domicile is in Fiji, unless the Commissioner is satisfied that his permanent place of abode is outside Fiji;
- who has actually been in Fiji, continuously or intermittently, during more than one-half of the income year, unless the Commissioner is satisfied that his usual place of abode is outside Fiji and that he does not intend to take up residence in Fiji.
A non-resident is liable for Fiji tax on income for personal services performed in Fiji, and other income from Fiji sources.
How to make payments?
You can make payments:
- through internet banking (Bill Pay Services)
- by post;
- at a local bank branch;
- at FRCA's Customer Service Centres;
- by using FRCA's drop box (cheques only); or
- by credit card (a processing fee applies for each transaction).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.