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Moneylending business

Wednesday, December 06, 2017

THE Fiji Revenue & Customs Service (FRCS) is committed to raising the standards in administering taxes in Fiji by addressing tax and custom issues to maximise voluntary compliance.

By doing so, FRCS ensures that it continually maintains a platform where there is consistency and fairness in the advice it provides to its stakeholders, traders, travelers, taxpayers and ordinary Fijians.

The importance of accurate and adequate information provided to ensure voluntary compliance cannot be over emphasised.

Voluntary compliance is simply a behavior that requires absolute commitment, vigilance, integrity and consistency.

It is about honest disclosures, timely lodgments, timely payments, data accuracy, data integrity, proper record keeping and completeness in all your tax obligations.

In this week's edition we look at the moneylending business and the tax obligations of a moneylender required under the tax laws to ensure maximum compliance.

The reality

The moneylending business has grown rapidly over the years and while we see the increase in the demand for moneylenders in Fiji it is also evident that the moneylending business has become a major source of credit for low and even some high income earners in Fiji.

As such over the year's moneylending has become one of the common ways for individuals to access short-term and quick efficient credit to meet their social responsibilities.

In most cases individuals borrow money from moneylenders to settle overdue utility bills, school fees, hire purchase payments, medical expenses, unexpected circumstances like funerals etc.

This is a short term loan option that individuals handily take in times of financial crisis.

While we see and understand the thrive of moneylending businesses in Fiji, it is unfortunate for the tax office to note that moneylending businesses continue to infringe in the tax laws by not complying at all.

Simple requirements such as TIN registration for moneylending businesses, declaration of income derived from money lending, proper record keeping are some of the areas where moneylending businesses have not complied at all.

This is a concern to the Fiji Revenue & Customs Service as it demonstrates simple negligence of the law which is unfair to those that are complying.

Despite governments attempt in implementing policies like the tax amnesty program to provide relief to taxpayers, FRCS notices that a wide range of taxpayers including the moneylenders choose not to comply.

Today, we see moneylenders operating from almost anywhere in town, in the market places, work places, residential places etc., others are normally seen only on the early hours of the morning withdrawing at different ATM locations.

This goes to show that moneylenders receive huge amount of income every week, but whether it is correctly declared to the Fiji Revenue & Customs Service or not remains a concern.

FRCS continues to receive reports on the non-issuance of receipts and invoices by moneylenders to its customers.

This again, goes to show that records are not properly maintained by moneylenders hence there is a high risk of unaccounted income when it comes to declaration.

Moneylenders must understand that incorrect declaration of income to the Fiji Revenue & Customs Service is a serious offense under the tax law and is punishable through penalties and prosecution.

Any income that is unaccounted to FRCS by moneylenders will be dealt with severely.

The Fiji Revenue & Customs Service is creating awareness to enable moneylenders to confidently and freely come forward without fear to declare their business and the income they earn.

Registration obligations

It has come to the attention of the Fiji Revenue & Customs Service that most of the licensed and unlicensed moneylenders are still not registered with FRCS for tax purposes.

This basically means that moneylenders have continued doing business without getting a proper tax identification number for their moneylending business.

All moneylender businesses are required under the tax law to register at FRCS for a tax identification number.

This means that they are to complete the required TIN registration forms, attach all registration requirements and ensure that all necessary moneylending business details are correctly declared to FRCS.

The Fiji Revenue & Customs Service urges moneylenders to voluntary comply with the tax registration requirements as this is their first tax obligation which they must abide by on commencement of business.

Moneylenders who are in operation but have yet to be registered with FRCS must ensure that proper registrations are done in FRCS for compliance purposes.

Reporting and payment


Moneylenders are required to declare their total income to the Fiji Revenue & Customs Service on an annual basis.

They are to complete a Form B tax return and ensure that their total income received in the tax year is correctly declared to FRCS.

Failing to lodge income tax returns is an offence under the Tax Administration Act 2009.

Where moneylenders are required to pay taxes they must ensure that they pay the correct tax on time.

Where moneylenders have not lodged on time a penalty of 20 per cent is applicable on tax payable, similarly where moneylenders have not paid on time then an additional 25 per cent on the balance of the tax will also be due.

The Fiji Revenue & Customs Service will ensure that all moneylenders comply with the reporting and payment requirements at all times.

Moneylending — an exempt


Moneylenders are not required to charge VAT to their customers as the supply of financial services is an exempt supply under the VAT Act.

This also means that they are not required to be registered for VAT regardless of their level of income.

FRCS appeals to those individuals who engage the service of a moneylender to carefully observe the charges that moneylenders impose.

Any VAT charged by any moneylender must be reported immediately to FRCS to investigate.

Tax amnesty

The Fiji Revenue & Customs Service wants to re-emphasise on the tax amnesty program.

The tax amnesty program is granted for undeclared foreign assets and income and a general amnesty program which is granted to Fiji resident taxpayers with a gross turnover of less than $F1.5 million.

The tax amnesty program is effective till December 31, 2017.

The tax amnesty is limited to two specific streams of penalty waivers, namely:

1. Waiver of tax and penalties on voluntary disclosure of all offshore assets and any other sources of income; and

2. Waiver of all penalties — applicable to those with annual gross income less than $1.5m (except for section 46 — audit penalties) on all accepted tax liabilities for taxpayers who genuinely need time to pay.

The Fiji Revenue & Customs Service encourages money lenders who have offshore assets, properties and sources of income to freely disclose any information that is required under this amnesty program.

This is an ideal opportunity for all moneylenders to take advantage of, as the grace period is only offered for a limited time.

Record keeping

Moneylenders are urged to keep proper records as this is a requirement under the tax law. Records such as receipt and invoice books when receiving cash from customers for payment of debts should be well maintained as FRCS will continue to carry out spot-checks on moneylenders who have neglected to keep such records.

Fiji Revenue & Customs Service will also ensure that all income declared and expenses claimed are correctly substantiated by valid source documents.

Free of charge service

In its efforts to maximise voluntary compliance the Fiji Revenue & Customs Service is reaching out to businesses and individuals to provide assistance effectively at no cost at all.

FRCS wants to eliminate the fear environment that businesses have to deal with when they do business with the tax office.

This is a perception that the tax office wishes to eradicate permanently hence FRCS is inviting businesses to come forward and point out their tax needs.

Businesses that are facing difficulties in relations to return lodgments, preparation of financial accounts, tax calculations, proper record keeping etc. are urged to contact our officers at any FRCS office for assistance.

Moneylenders are to be rest assured that FRCS is here to assist to ensure that there is absolute compliance.

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