House Rentals and Taxes

Owning a property of your own and earning an income from it is becoming a trend in Fiji as many people are looking at renting out their properties. More and more people are turning their homes into flats, extending and renovating to allow for tenants.

This is mostly done so that the added income can supplement their budget or in some cases, help save up for the a big event like graduation, wedding or even a birthday.

Fiji has 13 towns and two cities with one more expected to be declared shortly. With this in mind, more ad more people are moving to the urban areas in seek of job opportunities and education. As such, the Bureau of Statistics for Fiji has revealed that 56% of Fiji’s population live in urban areas. This has pushed the demand for housing to a higher level and many have decided to cash in on this demand.

However, as in many cases, there are processes in place before even renting or subletting a room or a flat. Anyone renting a flat or a house or even a portion of their property and is charging over $100, 000 is required by law to pay Value Added Tax  or VAT whereas those earning than this amount, can voluntarily register for VAT.

For those renting their house for the first time, it is always good to remember that there is a rent freeze in place since 2007 and this is regulated by the Fiji Competition and Consumer Commission. Apart from this, there are taxes involved and this is regulated by the Fiji Revenue and Customs Services.

Fiji Competition and Consumer Commission

The Fiji Competition and Consumer Commission is a multi-sector regulator who looks after competition, pricing as well as consumer protection. One sector it looks after is rental charged for residential properties.  In the rent control of the Fijian Competition and Consumer Commission Act 2010 (FCCC Act 2010), there is no distinction between residential properties rented to expats and locals.

The price of rent is attributed to the standard and facilities provided in each property. By law the first price is set by the landlord and tenant and does not need the intervention of the FCCC. Any increase thereafter is subject to the control of the FCCC and the rent freeze order currently in force. This implies that no increase is allowed during the period of the freeze and this has been in force since 2 March, 2007.

The only additional cost to rent is VAT that is normally charged on properties having the following:

• Landlord is already registered on VAT;

• Landlord earns income $100k or more/annum and is required by law to register on VAT before charging it on rent;

• Those who earn less than $100k/annum and have applied for voluntary registration can charge VAT on rent once registered.

Fiji Revenue and Customs Services

In Fiji, the Fiji Revenue and Customs Services or FRCS is the governing agency which looks after taxation and policies regarding tax. The FRCS has also revealed that rental income is also taxable.

All those earning more than $100, 000 in rent every month are required by law to register for VAT however those earning less than this amount are given the option to register voluntarily.

Once a year. FRCS declares an amnesty period for landlords to come forward and register voluntarily. This is done to promote voluntary tax compliance and encourage everyone to take responsibility towards their tax obligations. This exercise came to light after FRCS received tip offs as well as confirmed at there are landlords who are being evasive and this is punishable under Fijian Laws.

Registering Process

First you need to register for a Tax Identification Number (TIN). The TIN is used identify categories of tax and duty payers. The use of a TIN assists in FRCS handling queries, trace correspondence and store information for each person registered in the country.

Once registered, you are required to complete and submit the Rental Income Declaration Form however for those that are voluntarily registering, pick up a form called FRCS Voluntary Tax Compliance Initiative -Rental Income Declaration, this form can also be downloaded from their official website:  www.frcs.org.fj. When completed this has to be submitted with FRCS along with all supporting documents. Some of the supporting documents which may be required include copies of rental agreement/contracts, receipts, bank deposit slips, bank statements, etc.

Remember, this is not only for businesses or individuals who rent flats or properties, it also refers to those that carry out “homestay” businesses as well.

FRCS reveals that they are keeping a close tab on rentals as their Audit & Compliance Unit has received complaints of people engaged in rental activities but are not tax compliant. This Unit also carried out inspections for the underreporting of income by tax payers as well as properties so that they can see whether the landlord is evading taxes or not.

Apart from this, the public are also encouraged to report any suspicious dealings or concerns to FRCS by calling them on 3243-670 or 3243-610.