In 2009 the company tax or corporate rate will be reduced to 29 percent and then further reduced to 28 percent in 2010. The corporate tax currently stands at 31 percent.
There will also be an establishment of tax free regions, as Bainimarama said that the economically depressed Northern and Maritime Island region are in need of special consideration and assistance.
To encourage investment, support development and create employment opportunities in the North and the Maritime Islands, Government will declare Vanua Levu, Rotuma, Kadavu, Taveuni, Levuka, Lomaiviti, Kioa, Rabi and Lau, as tax free regions effective from 1st January 2009.
The Tax Free Regions incentive will include 13 years tax holiday for a new company and import duty exemption on raw materials, machinery and equipment for initial set-up.
In addition companies that start new projects with at least 25 percent equity participation involving indigenous Fijians will be granted an additional 5 year tax holiday. That is a total tax free status of 18 years. Bainimarama said such incentives should be provided to new companies investing at least $2 million.
The tourism industry has also received their biggest budget of 23.5 million dollars and a number of incentives have also been offered to the hotel and tourism industry.
There are new taxes - including a water resource tax and a road user levy.
There will be a Water Resource Tax levied on extract of water in its natural state which will be monitored on amount extracted from various water bottling companies around the country.
Road user levy will be introduced to improve road conditions by vehicle category and classification. No further details have been given but the new Road User Levy will come into effect from January 1st next year.
Corporate Tax Rate Reduced
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