The government has announced a drop in the VAT rate from 15% to 12.5% for the new financial year, effective from 1 August 2025.
This reduction in VAT is expected to deliver estimated savings of around $250 million for all Fijians.
In addition, the zero-rate VAT on 22 ‘essential’ items will be maintained.
To ensure that the benefits of tax reductions are fully passed on to consumers, a joint Pricing Monitoring and Enforcement Taskforce has been established to monitor prices of goods and services closely.
Speaking during the national budget address yesterday, Deputy Prime Minister Biman Prasad announced that all social welfare recipients and government pensioners will receive a 5% increase in their monthly allowance. The total funding will increase by $10 million to $220 million in the new financial year.
In other key announcements:
- A sum of $4 million is provided to support the reinstated pension payment for FNPF pensioners who were affected by the 2012 pension reforms.
- A total of $25 million is also provided in the budget for free water, medicine, and electricity subsidies for households with a combined income of $30,000 or less.
- The government has also announced a 10% bus fare subsidy for 12 months, effective from 1st August 2025 to the 31st of July 2026 at an estimated cost of around $10 million. In addition, free bus travel for students using the blue cards will continue.
- The government will also continue with the $200 Back-to-School Assistance payment for all eligible students, supported by an increased allocation of $50 million in the 2025-2026 budget.
- A 3% pay increase has been allocated to all civil servants in the budget, effective from pay period 17 in August. This follows the 7 to 20 percent adjustments in the last budget.
- To avoid tax evasion, money laundering, and underground economic activity through digital wallets, all mobile wallet account holders will be required to register with a Tax Identification Number (TIN), while purchasing a new SIM card. A six-month transition period will be provided to allow full compliance.