Tax-free status revoked

FIJI has announced that 28 com panies are to lose their tax-free zone factory concessions because they have failed to start exporting within the 12 months they were given as a deadline. Most of the companies con cerned were in garment manufacture, with others involved in furniture, bath room fittings, cosmetics, toys and fish.

Under the country’s tax-free zone (TFZ) system, the companies which get

tax holidays and exemption from duty

on equipment and raw materials must export 95 per cent of what they pro duce. Manufacturers have recently been pressuring the Government in Suva to relax this requirement so that more can be sold within Fiji, but there is no sign of

it being changed.

So far 93 companies are operating under TFZ conditions, with many more expected to begin operations in the near future. Most are garment manufacturers who have been able to grow through the absence of corporate tax (they have a 13-year holiday), the low wage structure

and tariff-free entry to the New Zealand and Australian domestic markets.

Fiji Trade and Investment Board director Surendra Sharma said the 28 companies were having their TFZ status withdrawn because they had failed to start establishment work on their pro jects within three months of approval and then had failed to begin commercial operations within the 12 month dead line. He said the revocations were a safe ty measure against possible abuse of the scheme such as using it to obtain work permits for foreigners.

Meanwhile, seasonal changes and varying style preferences in Australia and New Zealand have resulted in a fall in Fiji’s garment production. The Fiji Times has reported that some gar ment manufacturers in the Western Di vision had laid off staff. Some com panies report that New Zealand and Australian buyers are still holding stocks of last year’s garments a sign of the economic recession which has hit both countries. □