Atereano Mateariki RNZ Pacific journalist
Fiji’s
main tourism industry body says it welcomes the government’s
decision to relax its new tourism tax, but it remains
confused about some aspects of the controversial
policy.
The Fijian government first announced details
about a 5 percent Tourism Services Tax (TST) during the
2026-2027 National Budget address in late June, with the tax
slated to take effect on 1 September.
While parliament
subsequently passed the budget on 16 July, it was not until
late August, during the parliamentary sitting, that the
government clarified how the TST would be implemented. The
government said the purpose of the TST was to support the
nation’s national carrier, Fiji Airways.
It sparked a
backlash from travel industry stakeholders both locally and
abroad, including in Australia and New Zealand, over
concerns the government intended to apply the tax
retrospectively.
However, following significant
pushback, the Fiji government announced that the new tax
would only apply to new bookings made on or after 1
September.
“Bookings made before 1 September 2026 will
not be subject to TST, even where the tourism service is
provided after that date. This provides certainty for
visitors and enables tourism operators to honour existing
bookings and contractual arrangements.
following
discussions with the tourism industry on Tuesday,” it said
in a statement on Tuesday, after discussions with tourism
stakeholders.
It added: “The TST will apply to
qualifying tourism operators and services, as defined under
the Tourism Services Tax Act 2026, from 1 September 2026 to
31 August 2027.”
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Fiji Hotel and Tourism Association
(FHTA) chief executive Fantasha Lockington told Pacific
Waves that common sense had prevailed.
“That’s
exactly the outcome that we were looking for in all the
discussions we’ve been having with both the the tax
department as well as the Ministry of Finance,” she
said.
“So, the fact that it finally came through,
albeit a little late, is still very very much
appreciated.”
Fiji’s economy is heavily dependent on
the tourism dollar, with the industry contributing
approximately 40 percent of the country’s gross domestic
product (GDP).
In 2025, the tourism industry earned
FJ$2.8 billion (NZ$2.06b) and Australian and New Zealand
travellers made up nearly 70 percent of all visitors to the
island nation.
According to the FHTA, the new tax may
affect the ability to sustain continiung growth of the
sector.
Lockington said taxes were not new, but it
meant the industry must now work harder to keep Fiji
attractive to all holidaymakers.
“We’re going to have
to do a lot more as an industry to make Fiji as attractive
as possible, despite having this 5 percent tax
added.
“These are some of the things that small
Pacific Island nations like Fiji have to grapple
with.”
Lockington said only a few small or medium
businesses would meet the TST threshold.
But those
close to it, she added, might have to rethink
expansion.
“It will make smaller operators rethink
whether they should sit at FJ$2 million, and [they’re] going
to have to constantly prove that [they’re] below that
line.”
Fiji’s Revenue and Customs Service (FRCS) said
the TST would apply to qualifying tourism services supplied
or consumed from 1 September 2026 by businesses exceeding
the prescribed FJ$2m turnover threshold.
“From the
meeting that we were advised, there [were approximately] of
138 businesses and all those business that are going above
the thresholod of FJ$2 million will be sent out a blast
email for the registration around the 1st of
September.”
Lockington said the FHTA’s understanding
was that the tourism services tax would conclude on 31
August 2027, but the legislation does not explicitly state
as such.
The FRCS said the agreement was only for 12
months.
“After the 12 months, they will relook into
the bill and if the government, if they would like to
continue, we will be sent a confirmation for that. That’s
how we’ll be advising the taxpayers. But right now it’s only
for 12
months.”
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