The 2013 revenue target of $1.852billion will be a challenge for the Fiji Revenue and Customs Authority.
However, while announcing the release of the Authority’s 2012 Annual Report today, Chief Executive Officer, Jitoko Tikolevu said they would focus on compliance, debt collection, public awareness, and more targeted audit activities.
“We collected a total of $1.74 billion, which exceeded the 2012 Budget forecast by $6m. The collections accounted for 88.5% of total 2012 Budget, signifying the continuous reliance on tax revenue,” Mr Tikolevu said.
“Our revenue growth was 9.4%, which was higher than that of the last decade average of 8.5.
“The growth was achieved despite the massive tax cuts, which had resulted in a direct loss of revenue of over $100m.
“It therefore reflects the success of the 2012 tax policy reforms and FRCA’s efforts of recouping revenue losses through better revenue administration as well as the imposition of new efficient and equitable taxes.”
A number of tax concessions or incentives were announced in the 2012 Budget. The total value of tax concessions approved by FRCA in 2012 was $633m against the $354m approved in 2011. The rise in the value of concessions had been consistent with the increased economic growth seen in 2012.
Mr Tikolevu said that Value Added Tax (VAT) had remained the dominant source of tax revenue and it has accounted for about 39.0% of total tax take in 2012.
“This pattern of relying on VAT is not new, as similar revenue mixes were noticed 10 years ago (between the 2003-2012 period).
“In absolute terms however, VAT revenue in 2012 is significantly higher than that of 2003 by 82.8%.
“This remarkable increase reflects the growing taxpayer base as well as the impact of the increased VAT rate from 10% to 12.5% and then to 15% in 2011. The tax cuts announced in 2012 will boost VAT collections in 2013 through increased consumption.
“The VAT collections in 2012 were higher than that of the previous year by $58.1m or 9.4%.
“Since Fiji’s independence, income and trade taxes do not constitute a large percentage of total tax revenue owing to policies towards investment promotion and trade liberalisation respectively.
“The revenue mix has changed in favour of VAT and has remained the same way over the last 10 years.”
In 2012, the receipts from PAYE and Corporate taxes accounted for about 74% of income tax revenue with the remaining being collected from sole traders, withholding and other taxes.
A massive $42.1m income tax refunds was also made in 2012. Most of the income tax refunds were in relation to individual taxpayers and the amount refunded has positively correlated with the number of returns received from taxpayers. ––– FRCA
Fiji Revenue and Customs Authority, Jitoko Tikolevu at the FRCA 2012 Annual Report press conference yesterday. Photo: RONALD KUMAAR