Deputy Prime Minister and Minister for Finance, Professor Biman Prasad confirms the Fiji Revenue Customs Service has told him that the total income tax collected from all bottled water companies operating in Fiji last year was lower than $5 million, and he does not know where Fiji Labour Party Leader, Mahendra Chaudhry gets his information from that Fiji Water made a profit of $63 million which would lead to income tax (at 25%) of $16 million.
Professor Prasad says either FRCS or Mr Chaudhry is wrong - and the Deputy Prime Minister says he believes FRCS, not Chaudhry.
He also says Mahendra Chaudhry is now sounding like a broken record as he desperately looks for ways to continue to attack the Budget while the rest of the people have moved on.
Professor Prasad says Chaudhry continues to say that the water resource tax restructuring is bad for Fiji.
He says does not know what profit Fiji Water made last year, and even as Finance Minister, he has no right to ask Fiji Revenue and Customs Service or Fiji Water that question.
Professor Prasad stresses that Chaudhry’s attacks on the bottled water industry tax exemption are false and ill-informed.
The Finance Minister says Chaudhry claims Fiji will lose “hundreds of millions in tax revenue in the next seven years.”
Professor Prasad says that is nonsense as the Fiji Government will not lose a cent from this tax measure.
Professor Prasad says this measure helps our major investors to claim tax credits overseas which will allow them to reinvest more in Fiji.
He says the increase in the highest tier of water resource tax is to compensate for the corporate tax lost from the bottled water industry because of the exemption.
He clarifies Fiji Water the largest player in the industry will not pay any less tax but in fact pay more in taxes to Government now.
All other bottling companies will benefit from the corporate tax exemption and will not pay anything more in water resource tax as those producing less than 10 million litres per month will continue to pay only 1 cent per litre compared to an increased 19.5 cents for those companies who produce more than 10 million litres per month. This rate used to be 18 cents per litre and there is only one company that falls under this category.
He also clarifies that companies that will pay the increased water resource tax of 19.5 cents will pay the tax on every litre of water extracted and not only above 10 million litres as being claimed by FijiFirst.
They also have not changed the threshold from 3.5 million litres to 10 million litres as claimed by a recent FijiFirst post.
The Finance Minister says this is another blatant lie and shows the desperation from a party that is getting irrelevant.
Professor Prasad stresses water resource tax is projected to significantly increase, from $73 million to $91 million – an increase of almost 25 percent. He says the bulk of this will be paid by the biggest industry participant, Fiji Water.
The Finance Minister also says this tax restructure was proposed by and negotiated with the bottled water industry.
He says there is no secret about it. Professor Prasad also stresses that there is no link between this tax change and the Prime Minister’s meeting with Mr and Mrs Resnick in Los Angeles.
He says this tax measure was negotiated directly by the bottled water industry and FRCS officials.
Chaudhry maintains there is absolutely no reason to grant corporate tax exemption to Fiji Water which is a 27 year old well established, extremely wealthy company.
He says in a statement last week, Richard Naidu claimed that the tax changes “will allow foreign companies to gain tax credits in the US while still increasing the government’s tax revenue.”
Chaudhry asks Naidu how can a company that does not pay corporate tax in Fiji claim tax credits in its home country. He says in any case, Fiji does not have a double taxation agreement with the USA.
He says this company is one of the largest privately held companies in the US with earnings of around $US5 billion in 2022 – the equivalent of Fiji’s GDP.
Chaudhry says the Fiscal Review Committee recommended a progressive water resource tax, which would have no doubt reduced Fiji Water’s tax burden. He says the government, however, went a step further and has gifted them a tax holiday.
Meanwhile Professor Prasad says he reminds the public that when Chaudhry was Finance Minister in the military government he tried to block Fiji Water exports in 2008 so he could demand more tax from Fiji Water.
He says this short-sighted measure did huge damage to Fiji’s reputation for foreign investment.
The Deputy Prime Minister says perhaps it is the success of our bottled water industry, 15 years on, that is still biting Chaudhry.
He says the actions of the military government severely damaged Fiji’s international reputation as a safe place for foreign investment.
Professor Prasad says Fiji Water survived the military and Fiji First governments to become Fiji’s biggest exporter and one of Fiji’s largest employers.
He says its products promote Fiji around the world every day – and Fiji Water is now paying more tax in Fiji than it has ever paid in the past.
Stay tuned for the latest news on our radio stations