Fiji's tourism sector has a new tax, and it starts in a matter of weeks.
The Tourism Services Tax Act 2026 introduces a 5% tax on tourism services, effective 1 September 2026, for operators with annual gross turnover above FJ$2 million. It was announced in the 2026–2027 National Budget delivered on 26 June 2026 and passed by Parliament in July.
If you run a hotel, an inbound tour business, a cruise or charter operation, or a water sports business at any real scale, this affects your pricing, your invoicing, and your monthly filing calendar. Below is what the legislation actually says — and, just as importantly, what it doesn't.
Who has to charge the Tourism Services Tax
The Act applies to a business providing a "tourism service". The Schedule lists six, and the wording matters, so here it is as the Act has it:
Accommodation, refreshments and any other services by a licensed hotel
Any services provided in a vessel that is wholly or principally engaged in the carriage of tourists within Fiji
Meals and beverages in a licensed bar or club located in any part of a hotel
Inbound tour services
All water sports including under water activities, surfing and river safari
Provision of similar services listed in all the above
That last item is a catch-all, and a loosely drafted one. It is broader than the "hotels and tour operators" shorthand used in most media coverage. If your business sits adjacent to any of the categories above, don't assume you're outside the net.
The threshold is annual gross turnover above $2 million. "Turnover" is defined as amounts received or receivable — so it reads as an accruals concept, not a cash one, and it is gross, not net of commissions.
Who actually owes it
This is worth getting right, because the commercial discussion about absorbing or passing on the tax turns on it.
The Act says the tax is payable by the person to whom the tourism service is provided — the guest. But it then says the tax is payable and recoverable from the "accountable person". That makes the operator a primary debtor, not merely a collection agent.
"Accountable person" means the owner, manager, sole precedent partner, and otherwise the person responsible for the daily management of the tourism service and for collecting the tax. Partnerships should note the precedent-partner limb specifically.
Government has indicated it expects much of the burden to be absorbed by operators rather than passed on; the Fiji Hotel and Tourism Association has publicly said the opposite. Whichever way you go, decide deliberately and make sure your rate cards and booking engine reflect it before 1 September.
What it costs your guest
Two points are settled by the Act:
The Tourism Services Tax is not itself subject to VAT. The Act says expressly that TST must not be subject to the value added tax charged under the VAT Act, so there is no tax-on-tax compounding in that direction.
It must be shown separately on the invoice. The tax must be "clearly and separately shown" on any tax invoice, invoice or receipt issued for a tourism service charge. You cannot fold it into a headline rate.
The figure being used across the industry is 17.5% — 12.5% VAT plus 5% TST. That is the right number if the 5% is applied to the VAT-exclusive charge, which is how the Fiji Hotel and Tourism Association and most commentators have read it. Be aware, though, that the Act does not actually say this. It charges the 5% on "annual gross turnover", and the definition of turnover is at least arguably VAT-inclusive. On that reading the combined burden is 18.125%, not 17.5%. See the open questions below before you finalise system configuration.
Registration and monthly filing
Existing operators do not need to register. Anyone responsible for the daily management of a tourism service at the commencement of the Act is deemed to be registered.
New businesses must register within 30 days before commencing, providing the name and address of the accountable person, details of partners and associates (identifying the precedent partner), directors and authorised officers for a company, the trading name, and the address where the service will be provided.
Filing is monthly. The accountable person must, on or before the last day of each month following the month in which the tax was collected, pay any outstanding tax to FRCS and lodge a return setting out total turnover for that month.
Which means: your first return and payment, covering September 2026, is due by 31 October 2026.
The penalties are severe by Fiji standards. Failure to file, or filing a return that is false or incorrect in any material particular, carries a fine of up to $25,000, imprisonment of up to 10 years, or both.
No, this is not the old Service Turnover Tax coming back
It's a fair assumption, and it's wrong in a way that matters.
Service Turnover Tax was repealed effective 1 August 2020. The Environment and Climate Adaptation Levy on prescribed services was repealed effective 1 April 2022. Neither is being revived, and neither is being replaced. The Tourism Services Tax is a standalone new Act with its own threshold, its own registration rules and its own filing cycle.
The differences are real: STT ran at 6% on a $1.25m threshold. This is 5% on a $2m threshold, with monthly filing and a very different penalty regime.
On duration: Government has described the tax as a temporary measure for twelve months, and the Act directs the revenue collected between 1 September 2026 and 31 August 2027 to the company that owns or operates Fiji Airways. But that is a hypothecation clause, not an expiry clause — the Act contains no sunset provision. Plan on the basis of the legislation, not the announcement.
One related change to configure at the same time
The same Budget introduced a special VAT time-of-supply rule for the tourism industry: VAT on supplies is to be accounted for at the time of checkout, or at the end of the stay. If you are reconfiguring your PMS or POS for TST anyway, do both at once.
What is still genuinely unclear
We would rather tell you what we don't know than guess. As at mid-August 2026, four things are unresolved:
Whether the 5% applies to a VAT-inclusive or VAT-exclusive base. The Act charges the tax on "turnover", defined as sums received or receivable in respect of a charge for a tourism service. It does not say the base is net of VAT. This changes the combined rate from 17.5% to 18.125% and it changes what you configure in your booking system.
Which 12 months count. The Act does not specify the measurement period for the $2 million threshold — prior tax year, current year, rolling 12 months, or financial year. There is no entry or exit rule, no apportionment for the short period from 1 September 2026, and no rule for a business that crosses $2m mid-year.
Whether 5% applies to all turnover or only the excess. The wording reads as though the whole of turnover is taxed once $2m is exceeded, but this is not stated unambiguously and no FRCS ruling exists.
Accruals or cash. The threshold is defined by reference to amounts received or receivable, but the payment obligation is keyed to "the month in which the tax was collected". There is no rule for amounts receivable but not yet collected.
There is also no transitional provision for forward bookings. If you have taken deposits or contracted rates for stays after 1 September, there is currently no published rule telling you how to treat them. Government has said it is willing to work with the industry on this, but an intention is not a rule.
FRCS has published the Bill and included the tax in its Budget Summary of Revenue Policies, but as at the date of writing there is no public notice, registration process, return form or Standard Interpretation Guideline for this tax. We are monitoring for all four.
What to do in the next two weeks
Work out whether you're over the threshold, using a defensible measurement basis you can document and explain if challenged.
Configure your POS and booking systems now to show the 5% as a separate line, with VAT not applied to it — and record the basis you have used for the 5% calculation so it can be adjusted if FRCS rules the other way.
Decide your pricing position — absorb or pass on — and update rate cards, OTA listings and confirmed booking terms accordingly.
Put 31 October 2026 in the calendar as your first filing deadline, and set a recurring monthly reminder from there.
Document your treatment of forward bookings, so that whatever FRCS eventually says, you can show a consistent and reasonable position.
How Alvin Kumar & Associates helps
We are working with tourism and hospitality clients across Fiji on this now:
Threshold assessment — determining whether your business is captured, and on what measurement basis, with the reasoning documented.
Systems and invoicing — configuring your POS, PMS or booking platform so the tax presents correctly on guest invoices alongside VAT, including the new tourism time-of-supply rule.
Pricing impact modelling — showing what absorbing versus passing on the 5% does to your margin across your rate mix, on both readings of the tax base.
Monthly registration, lodgement and payment — handled as part of your compliance package so the new monthly deadline doesn't become another thing to remember.
Forward booking treatment — a documented, defensible position for stays contracted before 1 September.
Ongoing monitoring — we will tell you the moment FRCS publishes guidance, forms or a ruling on the open questions above.
If you operate in tourism and you're not sure whether the $2 million threshold catches you, get in touch before the end of August. It is a much cheaper conversation now than it is in November.
Email: alvin@akfiji.com
WhatsApp: +679 714 2741