Income Tax (Budget Amendment) Decree 2010

IN exercise of the powers vested in me as the President of the Republic of Fiji and Commander in Chief of the Republic of Fiji Military Forces by virtue of the Executive Authority of Fiji Decree 2009, I hereby make the following Decree-

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1.-(1) This Decree may be cited as the Income Tax (Budget Amendment) Decree 2010.

"(12)-(1) Subject to subsection (2), the Minister may exempt or reduce tax rate for tax payable under this section on the income of the qualifying employees under the Sixth Schedule, who are residents of countries that do not have double tax agreements with Fiji.

(2) The Minister may by notice in writing to the Commissioner, direct that tax payable under this section be exempt or be paid at such reduced rate as specified in the notice.

(a) in subsection (1) paragraph (r) subparagraph (i) by deleting "31st December 2010" and substituting "31st December 2012";

"(zn) one and one half times the amount of expenditure not exceeding $250,000, incurred by a taxpayer, on marketing goods and services for export to South Pacific Island countries, excluding Australia and New Zealand."

"The period for export income deduction is extended as set out in the following table-

5. The Act is amended by deleting the Sixth Schedule and substituting Sixth Schedule-

1. Interpretation
2. Regulations
3. Limitation on applications for incentives
4. Audits to be in form approved by FAVC

5. Interpretation
6. Non-resident tax incentive
7. Application for approval
8. FAVC to consider applications
9. Minister must approve or reject an application
10. Approval must specify details of exemption or reduction
11. FAVC must inform applicant
12. Method of relief if final certificate is granted
13. FAVC may require security

14. Definitions
15. Audio - visual productions
16. Exclusions from references to audio - visual productions
17. Further exclusions from references to audio - visual productions
18. References to audio - visual production

19. Application for provisional certificate
20. Application for another provisional certificate
21. Form of application
22. FAVC to consider and decide on applications
23. FAVC to issue provisional certificate or give notice of refusal
24. Information to be provided to FAVC
25. FAVC may revoke or vary certificate in certain circumstances
26. Revocation does not prevent subsequent issue of certificate
27. Certificate deemed to be in force from time of issue
28. Certificate lapses unless application for final certificate made

29. Application for final certificate
30. Method of application
31. FAVC to consider and decide applications
32. FAVC issue final certificate or give notice of referral
33. Information to be provided to the FAVC
34. Final certificate deemed to be in force from time of issue

35. AVP may qualify as F1 or F2 AVP
36. Minimum prerequisites for F1 or F2 AVPs
37. Additional criteria to be satisfied for Fl status
38. Additional criteria to be satisfied for F2 status
39. Criteria for determining Fiji content of AVP

40. Deduction for capital expenditure
41. Deduction in event of taxpayer's death
42. Licensees may not claim deduction

43. Tax exemption of income derived from qualifying AVP
44. Sale of copyright interest

45. Definitions
46. Minister may declare studio city zone
47. FAVC may approve application for operating licence in studio city zone
48. Method of application
49. FAVC to consider and decide application
50. FAVC to issue audio-visual operating licence or give notice of refusal
51. FAVC may vary conditions of audio-visual operating licence
52. FAVC may approve transfer of audio - visual operating licence
53. FAVC may revoke an audio - visual operating licence
54. Register of operating licences
55. Transfer must be registered within 7 days
56. Exemption form tax of licensee's production activity income
57. Non-AVP and distribution income subject to tax
58. Tax assessable on sale of company or business in studio city zone

59. Definitions
60. FAVC may approve individuals for studio city zone benefits
61. Applications by non-residents
62. Requirements and conditions for tax exemption
63. Applications by residents
64. Requirements and conditions for tax exemption
65. FAVC must consider and decide on application

67. Film production company entitled to tax rebate
68. Amount of tax rebate
69. FAVC may issue certificate for a film

Division 3 - Production Expenditure and Qualifying Fiji Production Expenditure

70. Production expenditure - general test
71. Production expenditure - special qualifying Fiji production expenditure
72. Production expenditure - specific exclusions
73. Qualifying Fiji's production expenditure - general test
74. Qualifying Fiji's production expenditure - specific inclusions
75. Qualifying Fiji's production expenditure - specific exclusions
76. Qualifying Fiji's production expenditure - treatment of services embodied in goods
77. Expenditure to be worked out in Fiji dollars
78. Expenditure to be worked out on arm's-length basis
79. Expenditure incurred by prior production companies

80. Production company may apply for certificate
81. Refusal to issue certificate.
82. Issue of certificate
83. Revocation of certificate
84. Notice of decision
85. Review of decisions by the High Court
86. FAVC may make rules

1.-(1) For the purposes of this Schedule, unless the context otherwise requires -

(2) In this Schedule, unless otherwise defined herein, words and phrases shall have the meanings given to them under the Income Tax Act Cap 201 or, where the case may be, the Tax Administration Decree 2009.

2. The FAVC may with the concurrence of the Minister make regulations to prescribe:-

(b) the type of expenditure to be specified for the purpose of paragraphs 73,74, 75 and 76 of Part 5.

3.- (1) A company, production entity or any person engaged in the making of a film or audio-visual production in Fiji may apply for only one incentive under Parts 2, 3, 4 or 5 of this Schedule for each film or audio-visual production made in Fiji.

(2) Notwithstanding anything contained in subparagraph (1), the Minister may approve an application made under Part 2 by a company, production entity or any person engaged in the making of a film or audio-visual production who has applied for an incentive under either Part 3 or 5 of this Schedule.

4.-(1) Any company, production entity or person engaged in the making of a film or audio-visual production in Fiji that applies for an incentive under this Schedule shall provide the FAVC with an audited report in a form approved by the FAVC.

(a) in accordance with all applicable Fiji accounting standards, including any standards relating to the independence of auditors; and

"applicant" means a film company which makes an application under either paragraph 7 or 17;

"film" means a cinematographic or digital or analogue film made or intended for public exhibition or for use in connection with television;

"film company" means a non-resident company engaged, or intending to be engaged, in making a film in Fiji;

(a) emoluments paid to employees who are citizens or are permanently resident in Fiji; and

(b) the cost of goods produced in their entirety in Fiji except that, if goods acquired in Fiji have foreign and local cost contents, the estimated foreign cost content is excluded

"qualifying employee" means an employee of a film company who, other than in relation to being in Fiji for the purpose of the film company making a film, is a non-resident, and includes an individual engaged by a film company to work in Fiji on a contract of service or contract for services either with that individual or with any other person.

6. If the Minister is satisfied that it is expedient for the economic development of the film-making industry in Fiji, the Minister may upon the recommendation of the FAVC approve the income of the film company's qualifying employees to be:-

7.-(1) A film company seeking exemption or reduction of the rate of tax under this Part may apply to the FAVC for the Minister's approval under paragraph 6.

(2) An application under subparagraph (1) must be made in the prescribed form and must include: -

(b) the full name, address, nationality and country of usual residence of each qualifying employee concerned and the amount of emoluments payable by the film company while the employee is engaged in Fiji;

(d) the total amount the film company proposes to expend on local goods and services and a brief description of the good and services in respect of which the goods and services will be used;

(e) the duration for which the film company will be engaged in making the film in Fiji;

(g) the locations where the film company will be engaged during the making of the film in Fiji.

8.-(1) The FAVC shall consider and refer each application to the Minister together with the recommendation in respect of the application.

(2) The FAVC may before making a recommendation to the Minister require an applicant to provide additional information or particulars in order that it may properly consider the application.

9. The Minister upon receiving an application and recommendation from the FAVC, shall consider and by written notice to the FAVC approve or refuse the application.

10.-(1) Where the Minister approves an application in accordance with subparagraph 9 and the approval allows for -

(i) the qualifying employees whose income is chargeable to tax at a reduced rate;

11.-(1) The FAVC shall inform the applicant in writing of the Minister's decision.

(2) If the Minister approves an application, the FAVC shall provide the Commissioner with a copy of the approval.

12. Where a final certificate has been granted, the amount of tax payable by the applicant in respects of each qualifying employee the lesser of:-

(a) the amount of tax assessed in accordance with the general provisions of this Act; or

(b) the amount of tax assessed in accordance with the Minister's approval under paragraph 6.

13. An approved film company may be required by the FAVC to provide a suitable monetary security in favour of the Commissioner on the basis of tax payable by its qualifying employees under paragraph 12.

"applicant" means an applicant for a provisional or final certificate who is a resident individual, a resident partnership or a company incorporated in Fiji but excludes--

(a) a holder of a broadcast license in television or radio in Fiji or any associated company or individual with substantial holdings in a broadcast license in Fiji; and

(b) a theatrical exhibitor in Fiji or any associated company or individual with substantial holdings in a theatre or group of theatres in Fiji;

"approved financing charges" means the reasonable budgeted and approved cost of financing an audio-visual production and includes legal fees for financing, brokerage for financing, prospectus or offer document costs and disbursements if those charges do not exceed 8% of the production budget of an audio-visual production;

"approved marketing materials costs" means the reasonable budgeted and approved cost of generating masters for marketing materials if not less than 85% of the expenditure to produce such items is spent in Fiji and the budgets have been approved by the FAVC;

"audio recording" means an audio recording for commercial sale on disk, audio cassette, audio disc or on line services and includes music, a voice recording of spoken word, a book on tape or audio disc and a dramatic performance in any language;

"audio-visual production account" means, in relation to an audio-visual production; an account that opened in a Fiji bank for the purpose of audio-visual production and from which withdrawals may only be made for expending audio-visual production costs;

"audio-visual production costs" means, in relation to an audio-visual production, monies expended directly -

"audio-visual production levy" means a fee prescribed by the FAVC included in the budget of every qualifying audio-visual production payable to the FAVC;

"broadcast television programmes" means programmes produced on film or video tape, or digitally recorded for broadcast on free-to-air, free satellite or pay television, and includes television movies, mini-series, drama series, situation comedy series, documentaries and documentary series, educational programmes and series, animation series and current affairs series;

"completion bond" means an insurance policy ensuring completion of an audio-visual production for the benefit of the production entity and investors;

"completion bond company" means a company specialising in insuring and managing the risk associated with audio-visual production with operations and offices in Fiji which has in place necessary underwriting arrangements with internationally recognised insurance companies;

"computer software" means an interactive product or instruction set, operating system, manufacturing system, manufacturer controller set or communications protocol for use in or use such as computers, modems, play stations and other games consoles, televisions, video players, digital equipment, telecommunication devices, web servers, CD rom drives and stored on media including CD, Zip drive, computer disc, digital video disc, computer chip or online or any other electronic equipment and includes games, educational products and business products produced for sale, products for research and design and development, and the establishment software costs of a commercial operation, online e-commerce businesses, websites or internet businesses;

"direct to video or video disc programme" means a programme produced for marketing to the public by retail sale produced specifically for home use;

"Fl audio-visual production" means an audio-visual production which qualifies under Division 4;

"F2 audio-visual production" means an audio-visual production which qualifies under Division 4;

"feature film" means any film production with a running time of not less than 80 minutes and is intended for public exhibition as a theatrical release or television film or for sale as direct to video film;

"Fiji Production Company" means a limited liability company registered in Fiji and having 100% of its shares owned by residents;

"gross international and domestic revenues" means the revenues derived from the commercial exploitation of an audio-visual production (including advances, licence fees and royalties) collected by a collection agent or by other arrangements on behalf of international sales agents, distributors (including the production company where it performs that function) and their sub agents (including associated companies or entities operating at arm's - length);

"large format film" means a film produced in 70mm for exhibition in IMAX, IWERKS, SHOWSCAN and other 15/70, 81/70 and 4/70 large format theatres and ride simulators;

(a) broadcast television commercials (no more than 2 commercials per audio-visual production);

"production entity" means an applicant entity which has been granted a provisional certificate or a final certificate;

"qualifying audio-visual production" means an F1 or F2 audio-visual production that has been made-

(b) in pursuance of an agreement or arrangement entered into between the Fiji Government or an authority of the Fiji Government and the Government or an authority of the Government of another country under a co-production agreement or arrangement;

"relevant 24 months period" in relation to an audio-visual production, means the period of 24 months after the end of the year of assessment in which monies of a capital nature were first expended as audio-visual production costs, or by way of contribution to those costs;

"short film" means an approved film produced for public exhibition, television, theatres or at film festivals with a running time of less than 60 minutes and intended primarily as a demonstration of new and emerging film-making talent;

"substantial Fiji content" means at least 51 % of the running time of the completed qualifying audio-visual production showing Fiji as Fiji;

"theatrical feature film" means a film intended to be produced for initial release in theatres.

(2) For the purposes of the definition of "gross international and domestic revenues", the income is net of any deduction of the distributor in a specific country or place but no other deductions.

15. Subject to paragraphs 16 and 17, "audio-visual production" means the production, wholly or principally for exhibition or sale, or use in the conduct of business, of -

16. For the purposes of Divisions 2 to 6, a reference to an audio-visual production does not include a reference to an audio-visual production that is or is intended to be to a substantial extent-

(a) an audio-visual production for exhibition as an advertising programme or a commercial other than where that advertising programme or commercial is part of the marketing budget of an audio-visual production and is only advertising the audio-visual production which has funded it;

(b) an audio-visual production for exhibition as a discussion programme, a quiz programme, a panel programme, a variety programme or a programme of like nature, unless the AVP is produced by a Fiji Production Company;

17.-(1) For the purposes of Divisions 2 to 6, a reference to an audio-visual production does not include-

(a) an extension of broadcast television programmes beyond the first 26 episodes of a continuing series;

(b) an extension of broadcast television programmes and television movies beyond 2 full length films in a continuing series;

(2) Subparagraph (1) does not apply in the case of an AVP produced by a Fiji Production Company.

18. In this Part, unless a contrary intention appears, a reference to an audio-visual production includes a reference to a proposed audio-visual production.

19. An applicant may apply to the FAVC for a provisional certificate stating that a proposed audio visual production will, when complete, be a qualifying audio-visual production for the purposes of this Part.

20.-(1) An applicant who holds a current provisional certificate may not apply to the FAVC for a provisional certificate for another or a new audio-visual production until after a final certificate for the first or current audio-visual production has been issued by the FAVC.

(2) Notwithstanding anything in subparagraph (1), the FAVC may if it deems it expedient for the development of the audio-visual industry in Fiji, exercise its discretion to grant a provisional certificate for another or a new audio-visual production to an applicant who holds a current provisional certificate and has not yet been issued with a final certificate in respect thereof.

22.-(1) Upon receiving an application under paragraph 19, the FAVC must consider it and either approve or refuse it.

(a) the proposed audio-visual production, when complete, will be a qualifying Fiji audio-visual production; and

(b) having regard to the role of the applicant in the production of the audio-visual production, a provisional certificate should be issued.

(a) if it approves the application, issue a provisional certificate to the applicant in respect of the proposed audio-visual production; or

(b) if it refuses the application, give written notice to the applicant of its refusal of the application.

24. A production entity that applies for a provisional certificate shall furnish to the FAVC in writing, within a period specified by the FAVC, any information in relation to the proposed audio-visual production as the FAVC requests.

(a) at any time after the issue of the certificate, the FAVC becomes satisfied that the proposed audio-visual production does not comply with the conditions or requirements in respect of which the certificate was issued; or

(b) the production entity fails to comply with a request for information made by the FAVC under paragraph 24,

the FAVC may, by written notice to the person to whom the provisional certificate was issued revoke the provisional certificate with effect from the date of the certificate's issue or in the case of a qualifying audio-visual production which is an F1 AVP, vary its audio-visual production status from Fl to F2.

26. The revocation of a provisional certificate in respect of a proposed audio-visual production does not prevent the re-issue of a provisional certificate in respect of the same proposed audio-visual production or for a new audio-visual production by the same applicant.

27. Subject to paragraphs 25 and 28, a provisional certificate is deemed to have been in force at all times from the date of its issue.

28.-(1) If an application for a final certificate in respect of an audio-visual production is not made in accordance with Division 3 before the expiration of 12 months after the time when the audio-visual production is completed, a provisional certificate in respect of that audio-visual production is deemed never to have been in force.

(2) If an application is made by a Fiji Production Company, a provisional certificate issued in respect of the proposed AVP is deemed never to have been in force if the application for a final certificate in respect of the AVP is not made in accordance with Division 3 before the expiration of 6 months after the time when the AVP is completed.

(3) For the purposes of this Part, an audio-visual production is deemed complete when the FAVC is satisfied that it is ready for commercial distribution.

(4) The FAVC may at its discretion extend the periods in subparagraphs (1) and (2) above.

29. An applicant may apply to the FAVC for a final certificate stating that an audio-visual production that has been completed is a qualifying audio-visual production for the purposes of this Part.

31.-(1) If an application is made under paragraph 29, the FAVC must consider it and either approve or refuse

(b) having regard to the role of the applicant in the production of the audio-visual production, a final certificate should be issued.

(a) if it approves the application, issue a final certificate to the applicant in respect of the audio-visual production; or

(b) if it refuses the application, give written notice to the applicant of its refusal of the application.

33. A production entity that applies for a final certificate must furnish to the FAVC in writing, within a period specified in writing by the FAVC, such information in relation to the proposed audio-visual production as the FAVC requests.

34. A final certificate is irrevocable and deemed to have been in force from the date of its issue.

36.-(1) The minimum prerequisites for an audio-visual production to qualify as an Fl AVP or an F2 AVP are–

(a) 100% of the production budget less approved pre-production expenses must be deposited in an audio-visual production account prior to the commencement of the production;

(b) 100% of the profits or revenues to be paid to any Fiji investors in the production must pass through an approved Fiji bank account prior to disbursement and the Commissioner must be provided with half yearly statements of income and disbursement;

(d) a refundable producer's bond equal to 5% of the budgeted producer's fees must be paid to the FAVC before principal photography begins in Fiji;

(e) the audio-visual production is not, in the opinion of the FAVC, culturally derogative in its portrayal of Fiji or the people of Fiji;

(g) the audio-visual production must have a completion bond from a company that is independent of the applicant and is approved by the FAVC as an acceptable completion bond company;

(h) the audio-visual production has a certificate from the completion bond company confirming that-

(ii) producer fees and overheads paid or payable by the production entity for services of production do not exceed 15% of the total budget;

(iii) expenses to be paid by the production entity to non-arms length parties associated with the production are genuine and reasonable;

(iv) all expenses, allowances, wages and fees for service in the budget are commercial and are for services to be rendered on the audio-visual production;

(v) the audio-visual production has been, or will be able to be, completed within the relevant 24 months period; and

(vi) approved financing charges or approved marketing materials costs will be, or have been, spent in accordance with this Part.

(2) If an application is made by a Fiji Production Company, the requirement under subparagraph (g) does not apply but without requiring a certificate from a completion bond company the FAVC must be satisfied that the conditions under subparagraph (h) are met.

37.-(1) Subject to paragraph 36, audio-visual production who qualifies as an Fl AVP, shall satisfy the following-,

(i) the production entity has secured for the audio-visual production, to the satisfaction of the FAVC and on commercial terms, distribution for the production when complete in at least one significant international market; and

(ii) one of the following levels of expenditure has been or is budgeted, to be spent in Fiji

(a) 40% for a large format film, a feature film or broadcast television programmes;

(2) In addition to subsection (1), an audio visual production who qualifies as F1 AVP must also satisfy one of the criteria –

(i) a large format film, a feature film, a short film, broadcast television, a direct to video or video disc programme is directed, written or based on the creative idea of a citizen or a resident;

(ii) an audio recording is produced or composed by or is the performance principally of a resident or citizen;

(iii) computer software is based on the original creative idea developed by a resident or citizen; or

(iv) the content satisfies the guidelines set down by the FAVC from time to time for being a satisfactory portrayal of Fiji the history or life of the people of Fiji and Fiji's flora and fauna.

(3) If the Fl AVP is produced by a Fiji Production Company, then the requirement under subparagraph (1) (i) does not apply provided the FAVC is satisfied that the F1 AVP shall distribute through at least one significant local distributor when production is completed.

(4) For the purposes of assessing the levels of expenditure in subparagraph (1)(ii), the provisions of Division 3 of Part 5 shall apply and any reference to "tax rebate" therein shall for the purposes of subparagraph (3) be read as or to mean "F1 incentive".

38.-(1) Subject to paragraph 36, an audio-visual production who qualifies as an F2 AVP shall also satisfy the following -

(a) the production entity has secured for the audio-visual production, to the satisfaction of the FAVC and on commercial terms, distribution for the production when completed in at least one significant international market;

(b) one of the following levels of expenditure has been, or is budgeted to be, spent in Fiji -

(i) 40% for a large format film, a feature film or broadcast television programmes;

(2) If the F2 AVP is produced by a Fiji Production Company then the requirement under subparagraph (1)(a) does not apply provided that the FAVC is satisfied that the F2 AVP will when completed be distributed through at least one significant local distributor.

(3) For the purposes of assessing the levels of expenditure in subparagraph (1)(b), the provisions of Division 3 of Part 5 shall apply and any reference to "tax rebate" therein shall for the purposes of subparagraph (1)(b) be read as or to mean "F2 incentive".

39. An F1 or F2 AVP has, or will have substantial Fiji content for the purposes of being a qualifying audio-visual production, the FAVC must have regard to-

(i) the persons who took part, or will take part, in the making of the audio-visual production (including actors, authors, composers, designers, directors, editors, musicians, producers, script writers, singers and technicians);

(ii) the persons who are, or will be, the beneficial owners of the copyright in the audio-visual production; and

(iii) the persons who are, or will be, the beneficial owners in any shares in any company concerned in the making of the audio-visual production;

(d) the source from which monies that were used in the making of the audio-visual production were, or that are to be used in the making of the proposed audio-visual production will be derived;

(e) details of the production expenditure incurred, or the budgeted production expenditure to be incurred, in respect of the audio-visual production; and

Division 5 - Deductions for Capital Expenditure on Audio-Visual Productions

40. Subject to this Division, if a taxpayer during a year of assessment expends monies of a capital nature, under all contract by way of contribution to the audio-visual production costs in respect of a qualifying AVP and at the time when the monies were expended a provisional certificate or a final certificate was in force in relation to the AVP, an amount shall be allowed as a deduction in the assessment of the taxpayer in respect of the income in the year the monies are expended, being an amount equal to –

41. If a taxpayer dies before he has realised any deductions in relation to a qualifying AVP to which paragraph 40 applies, an amount must be allowed as a deduction in the assessment of the taxpayer's estate in respect of the year of income in which the taxpayer died, being an amount equal to--

42. A taxpayer, being a production entity, which is a licensee for the purposes of Part 4, shall not claim a deduction under this Division.

43. If a taxpayer expends monies of a capital nature, under a contract, by way of contribution to the audio-visual production costs in respect of a qualifying AVP, the income derived by the taxpayer from his investment in the qualifying AVP is exempt from tax until the taxpayer has received a return of--

44. A taxpayer who sells any copyright interest in a qualifying AVP, in respect of which a deduction under Division 5 has been claimed, must include the gross receipts of the sale in his total income.

"applicant for an audio visual operating licence" means a sole proprietor, a partnership or a company, which makes an application for an audio-visual operating licence;

"applicant for the zone" means a sole proprietor, a partnership or a company which makes an application for a declaration by the Minister pursuant to subparagraph 46(5);

"company" means a company incorporated in Fiji carrying on a business of production activity in Fiji and which has its operations exclusively in the studio city zone or temporary studio city zone;

"licensee" means a sole proprietor, a partnership or a company holding an audio-visual operating licence;

"partnership" means a partnership of 2 or more residents carrying on a business of production activity in Fiji and which has as its exclusive operating location in the studio city zone or temporary studio city zone;

"production activity" means any activity in the production of, world-wide distribution of, conduct of business in, or supply of services to:-

(g) development of interactive websites and other e-commerce and telecommunications operations,

"sole proprietor" means a resident carrying on a business of production activity in Fiji and whose business has as its exclusive operating location the studio city zone or temporary studio city zone.

46.-(1) Subject to other provisions of this paragraph, the Minister may, declare by notice in the Gazette any area of land (including any buildings situated or erected on that land) in Fiji to be a studio city zone for the purposes of this Part.

(2) Subject to the issue of a licence required under any written law and the Town Planning Act, the Minister may declare-

(a) a studio city zone for the purposes of the development of infrastructure, services and resources for the audio-visual industry and tourist attractions, hotels, residential accommodation, sporting facilities, amusement parks; and

(b) a temporary studio city zone for the purposes of the development of infrastructure, services and resources for the audio-visual industry.

(3) The Minister may declare, by notice published in the Gazette, any area of land (including buildings situated or erected on that land) in Fiji to be incorporated into and to form part of a studio city zone or a temporary studio city zone.

(4) The Minister may not declare more than one studio city zone at any time for a period of 15 years from the date the studio city zone was first declared following which period this provision will be subject to review.

(5) The Minister may declare, by order in the Gazette, any area of land (including any buildings situated or erected on that land) to be a temporary studio city zone in order that the land (and buildings) may be developed by the applicant for the zone for use by a licensee to conduct any production activity.

(7) A temporary studio city zone may be used as an interim facility for such period or periods as the Minister may declare.

47.-(l) An application for an audio visual operating licence authorising the carrying on of a production activity in the studio city zone or in a temporary studio city zone, by a sole proprietor, a partnership or a company for an audio - visual must be made to the FAVC.

(a) made to the FAVC in writing in the prescribed form and accompanied by the prescribed fee;

49. - (1) If an application is made under paragraph 47, the FAVC may approve or refuse the application.

(a) the applicant has entered into a contract or has secured a right to operate from facilities within the studio city zone or temporary studio city zone and will engage in a production activity;

(b) the applicant's production activity will generate employment opportunities for the people of Fiji; and

(c) the applicant's production activity will enhance, expand and improve the technological, trading capability and capacity of the economy of Fiji.

(3) The FAVC may approve an application subject to the applicant complying with any other condition the FAVC considers to be appropriate.

(a) on approval of an application - issue an audio-visual operating licence, including any conditions imposed by it; or

(b) on refusal of an the application - give written notice to the applicant of its refusal of the application.

51.-(1) The FAVC, may, if it considers it appropriate in the circumstances, vary the conditions of an audio-visual operating licence.

(2) The FAVC must, by written notice, inform a licensee of any variation in the conditions of the licensee's audio-visual operating licence and the variation is deemed to be effective from the date the notice is received by the licensee.

52.-(1) A licensee may apply to the FAVC in the prescribed form for its operating licence to be transferred to another sole proprietor, a partnership or a company.

(2) The FAVC may require the licensee or the proposed transferee to provide any other information as the FAVC requires in order for it to consider the transfer application.

(4) The FAVC may not approve a transfer of an audio-visual operating licence unless it is satisfied that the proposed transferee satisfies the criteria set out in paragraph 49(2).

(5) The FAVC must give written notice to the licensee of its decision under subparagraph (3).

53.-(1) The FAVC may give written notice to a licensee that it intends to revoke the licensee's audio-visual operating licence if–

(b) there has been non-compliance with any condition of the audio-visual operating licence; or

(2) If notice is given in accordance to subparagraph (1), FAVC must inform the licensee of the licensee's right to make representations to the FAVC on or before a date specified by the FAVC, being not less than 21 days from the day that notice is given under subparagraph (1).

(3) If a licensee makes representations, the FAVC must consider them and may by written notice to the licensee, withdraw its notice under subparagraph (1).

(4) If the FAVC does not withdraw its recommendation in accordance with subparagraph (3), or the licensee does not make any representations by the specified date the FAVC may, by written notice to the licensee, revoke the audio-visual operating licence from a date (being not less than 14 days and not more than 42 days from the date of the notice).

54.-(1) The FAVC must establish and maintain a register of all audio-visual operating licences and there must be entered in the register in respect of each audio-visual operating licence-

(b) the name, registered address and authorised representative of the sole proprietor, partnership or company to which the audio-visual operating licence was granted; and

(2) The register must be kept at the FAVC's principal office and be open to inspection during the times the FAVC directs, subject to the payment of the prescribed fee for each inspection.

55. If an audio-visual operating licence is transferred under paragraph 52, the sole proprietor, partnership or company to which it is transferred must within 7 days of the transfer, submit its name and address, and the name and address of its authorised representative, for inclusion in the register.

56. An audio-visual operating licence exempts the licensee from the payment of income tax under this Act (except for withholding tax) on any income derived by the licensee from the production activity with effect from the date of commencement of the audio-visual operating licence.

57. Any income of a licensee that is not derived from a production activity must be charged tax in accordance with the other provisions of this Act notwithstanding the business being located in the studio city zone.

58.-(1) In respect of any business activity carried out pursuant to this Division and notwithstanding any other provision of this Act, tax must be assessed, levied and paid, at the rate set out in subparagraph (2), in respect of any income from–

(2) The rate at which tax must be assessed, levied and paid under subsection (1) is--

(a) if the sale occurs within 2 years after the commencement of the business -20%;

(b) if the sale occurs within 4 years after the commencement of the business - 15%;

(d) if the sale occurs within 8 years after the commencement of the business -2¹/₂ %

(a) income derived from work in AVPs or production activities including contracted fees, wages, royalties and distributions of profits from AVPs or production activities but does not include any income from an AVP in respect of which a deduction has been claimed under this Part; and

(b) income from sports, performances including prize money, performance fees and endorsements.

60.-(1) The FAVC may approve an individual to enjoy the benefits specified in subparagraph (2) if -

(a) the individual indicates his or her intention to reside in the studio city zone;

(2) The earnings derived by an individual approved by the FAVC under subparagraph (1) are exempt from tax.

61. An application under this Division by an individual who is not a resident must be made in writing to the FAVC in the prescribed form and accompanied by the prescribed fee and must include, -

(a) confirmation that the applicant's country of citizenship is other than Fiji;

(ii) assets held in the studio city zone in excess of $250,000 in either real estate, tangible business assets including stock, plant and equipment and tools of trade, or other valuable and confirmable assets excluding cash and other liquid assets.

62. An individual, who is not a resident, approved by the FAVC is not eligible to claim in a year of assessment the tax exemption under paragraph 60(2) unless the individual-

(a) is resident in the studio city zone for a period or periods in aggregate of at least 60 days in the year of assessment;

(b) maintains a permanent place of residence in the studio city zone during the year of assessment; and

(c) provides to the Commissioner confirmation and certification by a chartered accountant holding a certificate of public practice of-

(i) net annual audio-visual earnings in excess of $100,000 in the year of assessment; and

(ii) assets held during the year of assessment in the studio city zone in excess of $250,000 in either real estate, tangible business assets including stock, plant and equipment and tools of trade, or other valuable and confirmable assets excluding cash and other liquid assets.

63. An application under this Division by a resident must be made in writing to the FAVC in the prescribed form and accompanied by the prescribed fee and must include-

(b) confirmation and certification by a chartered accountant holding a certificate of public practice of-

(ii) assets held in the studio city zone in excess of $100,000 in either real estate, tangible business assets including but not limited to stock, plant and equipment and tools of trade, or other valuable and confirmable assets excluding cash and other liquid assets.

64. An individual, who is a resident, approved by the FAVC is not eligible to claim in a year of assessment the tax exemption under paragraph 60(2) unless the individual-

(a) is resident in the studio city zone for a period or periods in aggregate of at least 183 days in the year of assessment; or, in the case of a resident who derives a minimum of 80% of audio-visual earnings from outside Fiji, is resident in the studio city zone for a period or periods in aggregate of at least 60 days in the year of assessment;

(b) maintains a primary place of residence in the studio city zone during the year of assessment; and

(c) provides to the Commissioner confirmation and certification by a chartered accountant holding a certificate of public practice of -

(i) net annual audio-visual earnings in excess of $50,000 in the year of assessment;

(ii) the source of audio visual earnings whether from within Fiji or from outside Fiji; and

(iii) assets held during the year of assessment in the studio city zone in excess of $100,000 in either real estate, tangible business assets including stock, plant and equipment and tools of trade, or other valuable and confirmable assets excluding cash and other liquid assets.

65.-(1) The FAVC must consider an application made under paragraph 61 or 63 for tax exemption and may approve or refuse the application for tax exemption.

(a) it is satisfied that it is expedient for the development of the audio-visual industry in Fiji;

(b) the work in audio-visual productions from which income is derived is original and creative and has cultural or creative merit; and

(3) The FAVC must give written notice to an applicant of its decision under subparagraph (1).

"broadcast television programmes" has the meaning given by paragraph 14 in Part 3;

"development expenditure" for a film means expenditure to the extent to which it is incurred in meeting the development costs for the film and includes expenditure to the extent to which it is incurred on any of the following -

(a) location surveys and other activities undertaken to assess locations for possible use in the film;

"film" means an aggregate of images, or of images and sounds, embodied in any material;

"make", in relation to a film, has the meaning given by subparagraphs 70(2), (3) and (4);

"qualifying Fiji production expenditure" has the meaning given by paragraphs 73 to 76;

67.-(1) A company is entitled to a tax rebate for an income year in respect of a film if--

(b) the FAVC, with the concurrence of the Minister, has issued a certificate to the company for the film under paragraph 69; and

(ii) is not a Fiji resident but lodges an income tax return for the purpose of claiming the tax rebate under this Part; and

(i) the holder of a broadcast licence in television or radio in Fiji and it is not associated with any company or individual with substantial holdings in a broadcast licence in Fiji; or

(ii) a theatrical exhibitor in Fiji and it is not associated with any company or individual with substantial holdings in a theatre or group of theatres in Fiji .

(f) the film production company is able to release and have the movie distributed for production in a least one significant International market to the satisfaction of the Minister responsible for FAVC;

(g) the film production company demonstrates to the satisfaction of the Minister responsible for FAVC that it–

(ii) will utilise technicians, students and technical aid facilities at the Film Making School at Fiji National University or any other specified local institutions.

(a) an application has been made under Part 3 of the Sixth Schedule to the Income Tax Act; or

(b) a provisional or final certificate for the film has been issued at any time under Part 3 of the Sixth Schedule to the Income Tax Act whether or not the certificate is still in force.

68.- (1) Subject to subparagraph (2), the amount of the tax rebate is 47% of the total of the company's qualifying Fiji production expenditure on the film (worked out using Division 3).

(2) If the qualifying Fiji production expenditure on the film exceeds $25 million, the maximum allowable tax rebate ) is $11.75 million.

69.-(1) The FAVC may, with the concurrence of the Minister, issue a certificate to a company stating that a film satisfies the following requirements-

(ii) is not a Fiji resident but lodges an income tax return for the purpose of claiming the tax rebate under this Part; and

(b) the FAVC has provided the company with provisional approval it make their film in Fiji under this incentive;

(ii) exhibition to the public by way of television broadcasting or pay television; or

(iii) distribution to the public as a video recording (whether on video tapes, digital video disks or otherwise); or

(ii) a broadcast television programme including television movies, mini-series, drama series, situation comedy series, documentaries and documentary series, educational programmes and series, animation series and current affairs series; or

(iii) a production intended for exhibition as an advertising programme or a commercial in at least 1 significant international market.

(e) the total of the company's qualifying Fiji production expenditure on the film (worked out using Division 3) is at least: -

(f) the company either carried out, or made the arrangements for the carrying out of, all the activities in Fiji that were necessary for the making of the film; and

(g) the company is the only company that satisfies sub-subparagraph (f) in relation to the film; and

(h) the film is not culturally derogative in its portrayal of Fiji or the people of Fiji; and

(i) the application for certificate for rebate was made no later than 12 months from the time that the film was completed;

(j) the film production company is able to release and have the movie distributed to the satisfaction of the Minister;

(k) the film production company demonstrates to the satisfaction of the Minister that it-

(ii) will utilise technicians, students and technical aid facilities at the film making School at Fiji National University or any other specified local institutions.

(2) A film is completed when it is first in a state where it could reasonably be regarded as ready to be distributed, broadcasted or exhibited to the general public.

Division 3-Production Expenditure and Qualifying Fiji Production Expenditure

70.-(1) A company's production expenditure on a film is expenditure that the company incurs to the extent to which it-

(2) The making of a film means the doing of the things necessary for the production of the first copy of the film.

(c) any other activities undertaken to bring the film up to the state where it could reasonably be regarded as ready to be distributed, broadcasted or exhibited to the general public.

(5) Without limiting subparagraph (1), a company's production expenditure on a film-

(a) may be expenditure that is incurred in the income year for which the tax rebate is sought or in an earlier income year;

(b) deductions in relation to the asset are available under the Income Tax (Allowances for Depreciation and Improvements) Instructions 1998;

the production expenditure of the company on the film includes an amount equal to the accumulated depreciation of the asset to the extent to which that accumulated depreciation is reasonably attributable to the use of the asset in the making of the film. The accumulated depreciation of the asset is to be worked out using the Income Tax (Allowances for Depreciation and Improvements) Instructions 1998.

71. Expenditure of a company is also production expenditure of the company on a film if it is qualifying Fiji production expenditure of the company on the film under paragraph 74.

72. Notwithstanding paragraphs 70 and 71, the following expenditure of a company is not production expenditure of the company on a film-

EXPENDITURE THAT DOES NOT COUNT AS PRODUCTION EXPENDITURE ON A FILM
Item	This kind of expenditure by the company is not production expenditure	except to the extent to which the expenditure is
1	Financing expenditure Expenditure incurred by way of, or in relation to, the financing of the film (including returns payable on amounts invested in the film and expenditure in relation to raising and servicing finance for the film)
2	Development expenditure Development expenditure on the film.	Qualifying Fiji's production expenditure under item 1 in the table in paragraph 74(1)
3	Copyright acquisition expenditure Expenditure incurred in acquiring copyright, or a licence in relation to copyright, in a pre-existing work for use in the film	Qualifying Fiji's production expenditure under item 2 in the table in paragraph 74(l)
4	General business overheads Expenditure incurred to meet the general business overheads of the company that:- (a) are not incurred in, or in relation to, the making of the film; and (b) are not reasonably attributable to: - (i) the use of equipment or other facilities for; or (ii) activities undertaken in the making of the film	Qualifying Fiji's production expenditure under item 3 in the table in paragraph 74(l)
5	Publicity and promotion expenditure Expenditure incurred in publicising or otherwise promoting the film (including press expenses, still photography, videotapes, public relations and other similar expenses)
6	Deferments Amounts that are payable only out of the receipts, earnings or profits from the film
7	Profit participation Amounts that: - (a) depend on the receipts, earnings or profits from the film; or (b) are otherwise dependent on the commercial performance of the film
8	Residuals Amounts payable in satisfaction of the residual rights of a person who is a member of the cast	Paid out by the company before the film is completed
9	Advances Amounts paid by way of advance on a payment to which item 6, 7 or 8 applies to the extent to which it may become repayable by the person to whom it is paid.
10	Acquisition of depreciating asset Expenditure to the extent to which it sets, or increases, the cost of a depreciating asset. This item has effect subject to paragraph 70(6)	Qualifying Fiji's production expenditure under item 2 in the table in paragraph 74(1)
11	Regulations Expenditure specified in regulations

73. A company's qualifying Fiji's production expenditure on a film is the company's production expenditure on the film to the extent to which it is incurred for, or is reasonably attributable to-

(a) goods and services provided in Fiji and which is paid from a Fiji bank account; or

(b) the use of land in Fiji and payment for which is made from a Fiji bank account; or

(c) the use of goods that are located in Fiji at the time they are used in the making of the film and which is paid for from a Fiji bank account.

74. -(1) The following expenditure of a company is also qualifying Fiji's production expenditure of the company on a film –

	EXPENDITURE THAT COUNTS AS SPECIAL FIJI EXPENDITURE ON A FILM
Item	Type of expenditure
1	Fiji development expenditure Development expenditure on the film to the extent to which it is incurred for, or is reasonably attributable to- (a) goods and services (including foreign cast, crew and other service providers) provided in Fiji and paid for from a Fiji bank account; or (b) the use of land or building located in Fiji and payment for which is made from a Fiji bank account; or (c) the use of goods that are located in Fiji at the time they are used in the making of the film the film and paid for from a Fiji bank account
2	Expenditure incurred in acquiring Fiji copyright Expenditure incurred to acquire copyright, or a licence in relation to copyright, in a pre-existing work for use in the film if the copyright is held by a qualified person under the Copyright Act 1999
3	Fiji business overheads Subject to subparagraph (3), general business overheads of the company that- (a) are incurred in or in relation to the making of the film; and (b) are reasonably attributable to- (i) the use of equipment or other facilities for; or (ii) activities undertaken in; the making of the film, to the extent to which they - (aa) are incurred for, or are reasonably attributable to- (i) goods and services provided in Fiji and paid from a Fiji bank account; or (ii) the use of land or buildings located in Fiji and payment for which is made from a Fiji bank account; or (iii) the use of goods that are located in Fiji at the time they are used in the making of the film and paid from a Fiji bank account; and (bb) represent a reasonable apportionment of those overheads between the making of the film and the other activities undertaken by the company
4	Travel to Fiji Expenditure of the company in relation to a person's travel to Fiji to undertake activities in Fiji in relation to the making of the film if the remuneration paid to the person for those activities is qualifying Fiji's production expenditure of the company
5	Approved post-production expenditure Approved post-production expenditure on the film paid from a Fiji bank account to the extent that it is incurred or reasonably attributable to approved post-production services in relation to the completing of the film made in Fiji. The maximum amount payable as rebate under this expenditure item shall be $75,000 for each qualifying AVP.
6	Regulations Expenditure prescribed by the regulations

(2) Legal costs will be covered by item 1 in the table in subparagraph (1) only if they relate to-

(3) General business overheads of the company are covered by item 3 in the table in subparagraph (1) only to the extent to which they do not exceed the lesser of -

75. Notwithstanding paragraphs 73 and 74, the following expenditure of a company is not qualifying Fiji's production expenditure of a company on a film–

(i) remuneration and other benefits provided to a person for the person's services in relation to the making of the film; or

(ii) travel and other costs associated with the services a person provides in relation to the making of the film,

if the person is not a member of the cast or crew and enters Fiji to work on the film for less than 2 consecutive calendar weeks;

Qualifying Fiji's production expenditure-treatment of services embodied in goods

(a) a company incurs expenditure for the provision of what is essentially a service; and

(b) the results of the service are provided to the company by being embodied in goods that are delivered to the company; and

the service is not provided to the company in Fiji merely because the goods are delivered to the company in Fiji.

77.-(1) Expenditure that is incurred in foreign currencies is to be converted into Fiji dollars for the purposes of quantifying the total of the company's qualifying Fiji's production expenditure on a film.

(2) The conversion rate to be used is the average of the exchange rates applicable from time to time during the period that–

(a) an arrangement under which a company incurs expenditure in relation to a film; or

(b) any act or transaction directly or indirectly connected with expenditure that a company incurs in relation to a film;

do not deal with each other at arm's length in relation to the arrangement, or in relation to the act or transaction, the expenditure is taken to be only so much (if any) of the expenditure as would have been incurred if they had been dealing with each other at arm's length in relation to the arrangement, or in relation to the act or transaction.

79.-(1) For the purposes of this Part, if a company (the incoming company) takes over the making of a film from another company (the outgoing company)-

(a) expenditure incurred in relation to the film by the outgoing company is taken to have been incurred in relation to the film by the incoming company; and

(b) expenditure that the incoming company incurs in order to be able to take over the making of the film is to be disregarded for the purposes of this Part; and

(c) any activities carried out, and arrangements made, by the outgoing company in relation to the film are taken, for the purposes of paragraph 69(1)(f) to have been carried out or made by the incoming company in relation to the film.

(a) expenditure incurred on the film by the outgoing company includes expenditure that the outgoing company is itself taken to have incurred on the film because of the operation of subparagraph (1); and

(b) activities carried out by the outgoing company in relation to the film include activities that the outgoing company is taken to have carried out in relation to the film because of the operation of subparagraph (1); and

(c) arrangements made by the outgoing company for the carrying out of activities in relation to the film include arrangements that the outgoing company is taken to have made because of the operation of subparagraph (1).

80.-(1) Once a film is completed, a company may apply to the FAVC for the issue of a certificate to the company for the film under paragraph 69.

(2) The application must be made in accordance with the rules determined by the FAVC under paragraph 86 so far as they relate to the requirements for applications.

81. If the FAVC, with the concurrence of the Minister, decides not to issue a certificate for a film, the FAVC must give the applicant written notice of the decision and reasons for the decision.

82.-(1) A certificate issued to a company under paragraph 69 must be in writing. The FAVC must give the Fiji Islands Revenue and Customs Authority notice of the issue of a certificate for a film within 30 days after issuing the certificate.

83.-(1) The FAVC may, with the concurrence of the Minister, revoke a certificate issued to a company for a film under paragraph 69 if the FAVC is satisfied that the issue of the certificate was obtained by fraud or serious misrepresentation.

(2) If the FAVC revokes a certificate under subparagraph (1), the FAVC must give the company to whom the certificate was issued written notice of the revocation including reasons for the decision to revoke the certificate.

(3) If a certificate is revoked under subparagraph (1), it is taken, for the purposes of this Part, never to have been issued.

84.-(1) This paragraph applies to a notice of a decision given under paragraph 81 or 83.

(2) The notice of the decision is to include the statements set out in subparagraph (3).

(3) There must be a statement to the effect that an application may be made to the High Court, by or on behalf of any entity whose interests are affected by the decision, for review of the decision.

(a) a decision made by the FAVC to refuse an application for a certificate under paragraph 69; or

(ii) to perform such other functions in relation to the operation of this Part as are specified in the rules;

(b) specifying procedures to be followed by the FAVC in performing its functions;

(d) specifying how applications for certificates (including provisional certificates) are to be made, including-

(iv) procedures for providing, at the FAVC's request, additional information in support of an application.

(2) Rules under subparagraph (1)(d)(iii) may include rules requiring reports by auditors or independent line producers.

87.-(1) The FAVC must cause a review of the operation of this Part to be conducted and completed before 1 January 2015 and thereafter at the end of every five year unless the Cabinet directs otherwise.

(i) an evaluation of the success of the tax rebate provided for by this Part as an incentive for attracting audio-visual production to Fiji, taking into account the net cost of the rebate; and

(ii) an assessment of the impact of the tax rebate on Fiji audio-visual industry including an assessment of the opportunities it generates for employment and skills transfer; and

(b) must allow an opportunity for any person or organization involved in the audio visual industry to make written submissions to the person conducting the review.

(2) The person who conducts the review must give the FAVC a written report of the review.

(3) Within three months of receipt by the FAVC of the written report of the review, the FAVC must submit a copy to the Minister for tabling to Cabinet.

88.-(1) A company entitled to a tax rebate under paragraph 67 must lodge a return of income with the Fiji Islands Revenue and Customs Authority for the relevant year in which the production was complete.

(2) The company that is entitled to a tax rebate under paragraph 67 may use that tax rebate as a rebate or credit against any tax due and payable by that company in Fiji in the relevant income year.

(3) If the total of the rebate exceeds the amount of tax that the company is due to pay in the relevant income year then the company will receive a refund from the Fiji Islands Revenue and Customs Authority.

(a) Inserting ",refurbishment or renovation" in between "construction" and "of";

"Provided, investment allowance on refurbishment or renovation under subparagraph (2) shall only be applicable to a vessel that is wholly or principally engaged in the carriage of tourists within Fiji and providing accommodation for more than 3 nights.

(2A) For the purpose of the proviso in sub paragraph (2), "refurbishment or renovation", means those construction works of a substantial nature carried out in or upon an existing vessel which have the effect of restoring the vessel to a sound and as new state and/or which reconstruct, remodel, alter, upgrade or amend the interior of an existing vessel, such not to be confined only to the repainting or redecorating of an existing vessel. The capital expenditure allowable under sub paragraph (2) shall be given--

"(1) - (a) Any hotel owner who has been given provisional approval the hotel owner shall commence the implementation of the project within one year from the date of which the provisional approval was granted.

(b) Subject to the other provisions of this paragraph where a hotel owner has been given provisional approval and has completed the project, the hotel owner may apply to the Minister for final approval."

"(1) If a company who has been given provisional approval, the company shall commence the implementation of the project within one year from the date of which the provisional approval was granted.

(b) Subject to the other provisions of this paragraph, where a company has been given provisional approval and has completed the project, the company may apply to the Minister for final approval."

Year of assessment	Percentage of export income to be deducted
2011	50%
2012	40%
2013	30%
2014	20%
2015	10%"

Fiji Sessional Legislation

Income Tax (Budget Amendment) Decree 2010