Foreign Currency Account Scheme in Fiji
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Tweet this pageAs part of the initiative to assist Fiji’s balance of payments, the Prime Minister and Minister for Finance announced the opening of Foreign Currency Accounts Scheme in Fiji for non-residents. This new initiative by the Government has been effective since 1 January 2009 as per Press Release (downloadable)
The Scheme offers tax-exemption on interest earned on term deposits held with local banks and deposit taking institutions. Under the Scheme, non-residents can either hold foreign currency denominated deposits or Fiji dollar accounts. However, on foreign currency deposits, investors with deposits of more than the equivalent of F$300,000 will be eligible for tax exemptions on the interest income. However, participants are encouraged to hold funds in Fiji dollar term deposits as there is no threshold to qualify for tax free exemption on interest income.
Foreign Currency Accounts
Exchange Control Policy
The Reserve Bank Board decided to remove the credit ceiling put in place on banks in December 2006 and has been effective from 1 September 2009.However, the guidelines given to commercial banks with respect to priority sectors will remain in place and banks to strictly comply with these. The Reserve Bank of Fiji will be monitoring commercial banks’ lending to these sectors closely. As much as possible the financing of luxury imports is to be discouraged as much as possible.
Details on Policy on Local Borrowing by Non-Resident Individuals
Latest Update on Fiji's Exchange Control will be available from the Reserve Bank of Fiji
Foreign Currency Accounts
Eligibility - The programme is open to citizens of all countries, including Fiji residents who have emigrated.
Eligibility - The programme is open to citizens of all countries, including Fiji residents who have emigrated.
| Amount: | Any amount maybe placed in fixed deposit |
| Source of Funds |
From external sources in US$, JPY, EURO, AU$, NZ$ and GBP
This may include funds from Fiji sources e.g. participant’s own funds derived from savings, dividends etc. where exchange control approval has been granted for the purchase of foreign currency |
| Tax Exemption: |
Interest income for deposits above F$300,000 will be exempt from local tax, however, participants in the “Foreign
Currency Accounts Scheme” must apply to the Fiji Revenue & Customs Authority (FIRCA) for a Certificate of Exemption from income tax Participants are required to renew this Certificate annually Applications are to be made on the relevant form, “Application for Certificate of Exemption from Resident Interest Withholding Tax” which is available on FIRCA’s website: http://www.frca.org.fj application form is to be submitted together with a copy of the participant’s most recent bank statement of his bank account in Fiji. |
| Other Incentives: | Deposits can be used to secure loans from local lenders; however, the loans must be used in Fiji |
| Fiji Dollar External Accounts | (foreign currency is converted into FJDs) |
| Amount: | Any amount may be placed in fixed deposit |
| Source of Funds: |
From external sources in US$, JPY, EURO, AU$, NZ$ and GBP
This may include funds from Fiji sources e.g. participant’s own funds derived from savings, dividends etc. where exchange control approval has been granted for the purchase of foreign currency; |
| Tax Exemption: |
Interest income will be exempt from local tax however; participants in the Scheme must apply to FIRCA for a Certificate of Exemption from income tax.
Participants are required to renew this Certificate annually. Applications are to be made on the relevant form “Application for Certificate of Exemption from Resident Interest Withholding Tax” which is available on FIRCA’s website: www.frca.org.fj The application form is to be submitted together with a copy of the participant’s most recent bank statement of his bank account in Fiji. |
| Other Incentives: | Deposits can be used to secure loans from local lenders; however, the loans must be used in Fiji Lodgment of Applications |
| Commercial Banks: | Applicants to apply on relevant application form to commercial banks and submit with the required documentation. Account opening must meet the requirements of commercial banks and credit institutions. |
Fiji Dollar External Accounts
(foreign currency is converted into Fijian Dollars (FJD))
| Amount: | Any amount may be placed in fixed deposit |
| Source of Funds: | From external sources in US$, JPY, EURO, AU$, NZ$ and GBP. This may include funds from Fiji sources e.g. participant’s own funds derived from savings, dividends etc. where exchange control approval has been granted for the purchase of foreign currency; |
| Tax Exemption: | Interest income will be exempt from local tax however; participants in the Scheme must apply to FIRCA for a Certificate of Exemption from income tax. Participants are required to renew this Certificate annually. Applications are to be made on the relevant form “Application for Certificate of Exemption from Resident Interest Withholding Tax” which is available on FIRCA’s website: www.frca.org.fj The application form is to be submitted together with a copy of the participant’s most recent bank statement of his bank account in Fiji. |
| Other Incentives: | Deposits can be used to secure loans from local lenders; however, the loans must be used in Fiji Lodgment of Applications |
| Commercial Banks: | Applicants to apply on relevant application form to commercial banks and submit with the required documentation. Account opening must meet the requirements of commercial banks and credit institutions. |
Exchange Control Policy
Details of changes to exchange control policies on local borrowing by non-resident controlled companies
Exchange Control encompasses Government’s regulations with regard to the buying and selling of foreign currency and related transactions between Fiji and the rest of the world.
Statutory Requirement
The powers and functions relating to exchange control are exercised and administered under the Exchange Control Act Cap.211 Rev. 1985 by the Reserve Bank of Fiji. These powers, except the power to make orders or to apply for a search warrant, are delegated to the Reserve Bank by the Minister of Finance under Section 48 of the Reserve Bank of Fiji Act.
Delegation of Authority
The powers delegated by the Minister of Finance, especially the authority to buy and sell foreign currencies are further delegated by the Reserve Bank of Fiji to authorised dealers. These are referred to as Delegated Authority (DA).
Processing of Applications
The delegated authority empowers authorised dealers to approve applications by customers that are within the specified delegated limits. An Exchange Control approval from the Reserve Bank is required where applications fall outside the Delegated Authority.
Where an applicant does not satisfactorily meet all the requirements stated for a particular transaction, the authorized dealer should seek the approval of the Reserve Bank.
Licensing of Foreign Exchange Dealers
Any person that wants to set up a foreign exchange business in Fiji will require to first apply to the Reserve Bank. Applicants must meet all the requirements stipulated by the Reserve Bank for such an operation.
The operation of authorised foreign exchange dealers is now licenced and supervised by the Reserve Bank within a regulated framework.
The Reserve Bank Board decided to remove the credit ceiling put in place on banks in December 2006 and has been effective from 1 September 2009.However, the guidelines given to commercial banks with respect to priority sectors will remain in place and banks to strictly comply with these. The Reserve Bank of Fiji will be monitoring commercial banks’ lending to these sectors closely. As much as possible the financing of luxury imports is to be discouraged as much as possible.
The Board of the Reserve Bank of Fiji in its monthly meeting in April 2008 announced a relaxation to the exchange control policy on local borrowing by non-resident controlled companies. Non-resident controlled companies will now be entitled to borrow more from commercial banks and other lending institutions. The new policy guidelines are as follows:
- Foreign owned companies will be allowed to borrow locally up to a certain percentage of their total borrowings based on their shareholding structure under the debt to equity ratio guideline of 3: 1. This applies to all new borrowing.
- 51% - 70% non-resident ownership - up to 85% local financing
- 71% - 90% non-resident ownership - up to 75% local financing
- 91% - 100% non-resident ownership - up to 60% local financing
- The policy will not apply to total new borrowing up to $500,000.
Details on Policy on Local Borrowing by Non-Resident Individuals
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Policy
|
Previous Policy
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Current Policy
|
|
a) Borrowing to purchase properties in exempted tourism projects
|
Restrictive additions to the
exempted list of companies
- Local borrowing allowed purchase of properties in exempted projects;
- 100% financing from offshore if project is not in exempted list
|
Non-resident controlled companies may now apply for exempted status which would allow non-resident individuals investing in their projects to borrow up to 75% locally under the following conditions:
- Project would have been 25% completed when the lending policy was implemented in January 2008;
- Documentary evidence of completion to be verified by a Chartered Accountant;
- Only stage of project in progress at that time of policy change will be exempted.
|
|
b) Borrowing to finance construction of residences
|
100% financing from offshore
|
Allow 60% local borrowing
- Debt to Equity ratio of 3:1 to be met
- Equity to include amount invested from offshore in the acquisition of land if fully funded from offshore
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c) Borrowing to finance house maintenance and repairs
|
100% financing from offshore
|
- Local borrowing allowed up to $100,000
- No outflows in the form of imports
|
|
Personal loans
|
- Up to $100,000
- Funds are to be utilized in Fiji and not to be remitted offshore
|
- No change
|
|
d) Borrowing to finance
property acquisition
Applies to:
- acquisition of land with no future plans for development
- acquisition of an existing residence
- tourism projects that are not in the exempted list
- 2nd tier purchases for companies in exempted list
|
- 100% financing from offshore
|
- No change
|
Latest Update on Fiji's Exchange Control will be available from the Reserve Bank of Fiji
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