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.
Fiji’s government relaxes tourism tax rules
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.
The government said the purpose of the TST was to support Fiji Airways.
Lisa Williams
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.”
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.”
FHTA chief executive Fantasha Lockington
Supplied/FHTA
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.”
