The Revenue and Customs Service (FRCS) has surpassed its first quarter fiscal year revenue target by collecting a total net revenue of $742.1 million for the quarter ended 31 October 2023, exceeding the forecast by $9.3 million, equivalent to 1.3%. This represented a significant 28.6% ($164.9 million) growth over the same period last year.

The favorable outcome can be attributed to the exceptional performance in October, where a net revenue of $269.0 million was achieved, exceeding the monthly forecast by a remarkable $26.0 million, representing a 10.7% positive variance. The overall revenue collections for the 2023-2024 financial year are projected at $3.1 billion, an increase of $855.4 million compared to the 2022-2023 fiscal year.

FRCS Acting CEO, Mr. Malakai Naiyaga, credited the favorable cumulative collection to the performance of key tax categories such as Value Added Tax (VAT), which contributed $332.1 or 44.8% towards the total collections, Income taxes contributed $216.1m or 29.1%, Trade Taxes contributed $132.6m or 17.9% and other taxes and levies contributed $61.2m or 8.2% of the tax mix.

“The positive collections are indicative of a broad-based economic recovery across all sectors leading to increased revenue. This recovery signifies higher profits for businesses, increased individual income, and a surge in consumer spending. Notably, the improvements observed in these collections indicate a notable economic upturn compared to the previous year,” Mr Naiyaga said.

“This resurgence is attributed to several key factors, including the services sector benefiting from increased tourism, enhanced income tax payments due to improved turnover and profits by companies, and an upsurge in VAT collections driven by pent-up consumer demand. These collective elements have played a crucial role in driving the economic upswing, reflecting a positive revenue collection trend across various sectors,” he said.

Mr. Naiyaga added that the strong revenue performance has provided a solid foundation for the remainder of 2023-2024 fiscal year, now at 23.9% of the $3.1b annual target.

“FRCS is committed to partnering with stakeholders and taxpayers to foster a culture of tax compliance. We are assisting taxpayers with filing and paying taxes and our team is also conducting awareness campaigns and stakeholder forums aligned with the 2023-2024 National Budget goals,” he said.

VAT is a consumption tax which is administered by FRCS and contributes approximately 40 to 45 percent of the Government revenue.

The objective of the VAT Guide is to support voluntary compliance as it will provide practical guidance on the application of the VAT laws and allow taxpayers to implement the VAT legislation more effectively.  FRCS is grateful for the technical assistance provided by the Asian Development Bank (ADB) Domestic Resources Mobilization Trust Fund for developing the VAT Guide.

While launching the VAT Guide, our Acting Chief Executive officer Mr. Malakai Naiyaga, said the VAT Guide has been designed to simplify the understanding and application of the VAT legislation, particularly for those who do not have much technical knowledge on VAT.

Mr. Naiyaga said that the VAT Guide has the relevant information that is supported through practical examples for emerging businesses, sole traders, Micro, Small and Medium Enterprises (MSMEs) and for anyone who is planning to become a VAT-registered taxpayer.

“To highlight the importance of VAT, allow me to briefly share some of the budget figures. In this financial year’s budget 2023-2024, the Government is forecasting $3.1billion in revenue to be collected by FRCS. Of this amount, VAT accounts for $1.53billion which represents about 50% of the total revenue,” he said.

“Therefore, a dedicated focus on improving VAT Compliance is fundamental to successful revenue collection. Our approach is shifting towards collaboration, partnership, awareness, and education as necessary in building a national tax compliance culture.”

The Regional Director of ADB Pacific Subregional Office Mr. Aaron Batten was pleased to join us this morning for yet another important milestone in Fiji’s taxation system; with the launching of the new VAT Guide.

According to Mr. Batten, VAT contributes around 40 percent of the Government’s revenue, and an efficient and credible VAT system is one of the most important pillars of Fiji’s taxation systems.