WITH the upcoming introduction of the new Income Tax Decree, the Fiji Institute of Accountants (FIA) is concerned on the area of tax laws and administration.
FIA believes that it should be reviewed and amended, repealed or introduced because they are limited to existing anomalies.
FIA president Camacakau Raimuria said separate submissions to the Ministry of Finance on the 2013 National Budget have been made in respect of the new tax decree.
"With the introduction of Capital Gains Tax, deemed dividend provisions, imposed under Section 8, at the time of sale of shares (or "of a company") should be removed," Mr Raimuria said.
He said a clearly articulated and applied position and reasoning in respect of the levying of withholding on cross border payments was essential for business.
"These tax rules should be consistent with the overall provisions of the Fiji Income Tax Act and the double tax agreements that Fiji has with many countries."
He said business costs had increased significantly after an authority incorrectly levied withholding tax.
"Additionally where the profit margin on professional services is very low (say 7 per cent) it is inequitable to charge withholding tax at a rate of 15 per cent."
To address this inequity, the institute has suggested the old rules be reintroduced and allow abatement or rebate of withholding tax paid to non-residents by allowing the non-resident to lodge income tax return and claim credits for withholding tax paid," Mr Raimuria said
He said the change suggested by FIA would be consistent with international practice and reduce the cost of doing business as the tax was often borne by the Fiji entity. "Changing policies, interpretation and approach do not yield investor or business confidence. A clearly articulated and reasoned position with respect to the calculation of qualifying dividends particularly, in respect to pre-2001 tax payments is essential."
He added that consideration should be given to repeal the current provisions relating to Contractors Provisional Tax and replace the same with a simple but effective and workable system.
"The new system should be based on "tax invoice" criteria. Under this system, 15 per cent provisional tax should be deducted in the event the supplier of goods or services does not provide a "tax invoice".
He added that a current high rate of provisional tax, compared with corporate tax rates and top marginal rates of tax mean that business cash flow is tied up unnecessarily in excess tax credits.