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Fiji Time: 11:05 PM on Thursday 24 April

/ Front page / Business

Reduction in corporate tax rate hailed

Timoci Vula
Saturday, November 24, 2012

THIS may be an ideal time for private companies that have been considering listing on the South Pacific Stock Exchange (SPSE) to take steps towards doing it.

The government in recognising the importance of investment — as indicated by its 2013 Budget theme 'Investing in our Future' — has reduced corporate tax of 18.5 per cent for listed companies, which had minimum 40 per cent local shareholding.

SPSE chief executive officer Jinita Prasad said the reduction would help SPSE-listed companies further invest in Fiji's future.

She said as a regulated market, listed companies had to meet certain compliance requirements.

"The reduction in their tax rate by 7.5 per cent recognises that listed companies have included people of Fiji as shareowners and partners in the business," Ms Prasad said.

"The reduced corporate tax rate offsets the cost of listing and ongoing compliance and provides companies that are making timely disclosures the ability to use more internally-generated funds for reinvesting in their businesses and rewarding public shareowners," she said.

"Private companies should seriously consider that this reduced corporate tax rate makes becoming a listed company in Fiji even more attractive.

"Current listed companies and investors recognise that the tax change will result in improved wealth distribution through increased retail investor participation," she said.

Ms Prasad said a similar incentive tested in 2010 was too short-lived as the government subsequently reduced the general corporate tax rate, eliminating the tax advantage for listed companies. But this incentive, she said was much clearer and not limited by time," therefore, the many private companies that have been considering listing would be well-advised to take steps towards listing now".

"SPSE is currently liaising with the Fiji Revenue and Customs Authority to clarify other tax implications for the process of listing and investing in the stock market and is confident that once these issues are clearly addressed in the Income Tax Decree, the stock market will be poised for a major turnaround," Ms Prasad said.

She also acknowledged the continued support of the government to the SPSE through the grant received.

"This allocation of $250,000 from government will allow the exchange to sustain itself while continuing its development work," Ms Prasad said.

"The grant will be used to fund a number of important stock market development initiatives including concerted investor education programs," she said.