WORLD TRADE
ORGANIZATIONG/SCM/Q3/FJI/7
24 September 2002
(02-5106)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies by FIJI to a Request by the UNITED STATES1
The following communication, dated 17 September 2002, has been received from the
Permanent Mission of Fiji.
_______________
Please find attached Fiji's legislation on Film-Making and Audio-Visual Incentives
(Amendment) Act 2002, as requested.  Please note that it is no longer a Decree (as referred to in
earlier correspondence).  Since March 2002, it has been an Act of Parliament.
The legislation is primarily about preserving Fiji's culture, tradition and way of life and the
issue is thus much more than purely about an economic product.  The legislation ensures the
preservation, promotion and development of Fiji's unique cultural identity.
Fiji will submit, as soon as possible, other applicable legislation, as per the request of the
United States.
*  *  *
                                                     
1 G/SCM/Q3/FJI/6.G/SCM/Q3/FJI/7
Page 2
ACT NO. 2 OF 2002
I assent
J.I. ULUIVUDA
President
[L.S]
[11 March 2002]
AN ACT
TO MAKE FRESH PROVISION FOR FILM-MAKING AND AUDIO-
VISUAL INCENTIVES TO ENCOURAGE THE DEVELOPMENT OF THE
AUDIO-VISUAL INDUSTRY IN THE FI JI ISLANDS AND FOR RELATED
MATTERS –
ENACTED  by the Parliament of the Fiji Islands –
Short title, etc.
1. (1) This Act may be cited as the Income Tax (Film-Making and Audio-Visual Incentives)
(Amendment) Act 2002 and is deemed to have come into force on 18 May2001.
(2) In this Act, “principal Act” means the Income Tax Act (Cap. 201).
Section 16 amended
2. Section 16(2) of the principal Act is amended by repealing paragraph (e).
Section 16A inserted
3. The principal Act is amended by inserting after section 16 the following new section –
“16A. The film-making and audio-visual incentives are set out in the Sixth Schedule.”
Section 17 amended
4. Section 17 of the principal Act is amended by deleting the full stop at the end of
paragraph (57), substituting a semi-colon and adding the following new paragraph –
“(58) the income of –(a) the Fiji Islands Audio-Visual Commission established by  the Fiji  Islands Audio-
Visual Commission Act 2002; and
(b) the Audio-Visual Collection and the Audio-Visual School established by the Fiji
Audio-Visual Commission.”.
Section 21 amended
5. Section 21(1) of the principal Act is amended in paragraph (n) by inserting “,Fiji Islands
Audio-Visual Commission, Audio-Visual Collec tion, Audio-Visual School” after “Fiji Blind
Society”.
6. (1) The Income Tax Act (Film-Making and Audio-Visual Incentives) (Amendment)
Decree 2001 (Decree No. 4 of 2001) is repealed.G/SCM/Q3/FJI/7
Page 3
(2) Any act done by virtue of the Income Tax Act (Film-Making and Audio-Visual
Incentives) (Amendment) Decree 2001 is deemed to have been validated by this Act.
Sixth Schedule amended
7. The Sixth Schedule to the principal Act is repealed and replaced by the following Schedule –
“SIXTH SCHEDULE
(Section 16A)
__________
FILM-MAKING AND AUDIO-VISUAL INCENTIVES
__________
PART I – GENERAL
Interpretation
1. For the purposes of this Schedule –
“Fiji Islands Audio-Visual Commission” means the corporation of that name
established by section 3 of the Fiji Islands Audio-Visual Commission Act 2002;
“FAVC” means the Fiji Islands Audio-Visual Commission.
Prescription of forms and fees
2. The FAVC may, with the concurrence of the Minister, prescribe by regulations forms and
fees payable for the purposes of this Schedule.
PART II – FILM-MAKING INCENTIVES
Interpretation
3. For the purposes of this Part, unless the context otherwise requires –
“applicant” means a film company which makes an application under paragraph 5;
“application” means an application made under paragraph 5;“film” means a  cinematographic or digital or analogue film made or intended for
public exhibition or for use in connection with television;
“film company” means a non-resident company engaged, or intending to be engaged,
in making a film in the Fiji Islands;
“local goods and services” means –
(a) emoluments paid to employees who are citizens or are permanently resident
in the Fiji Islands; and
(b) the cost of goods produced in their entirety in the Fiji Islands except that, if
goods acquired in the Fiji Islands have foreign and local cost contents, the
estimated foreign cost content is excluded;
“qualifying employee” means an employee of a film company who, other than in
relation to being in the Fiji Islands for the purpose of the film company making aG/SCM/Q3/FJI/7
Page 4
film, is a non-resident, and includes an individual engaged by a film company to
work in the Fiji Islands on a contract for se rvices either with that individual or with
any other person.
Film-making incentive
4. If the Minister is satisfied that it is expedient for the economic development of the film-making industry in the Fiji Islands, the Minister may, approve an application for the income of the
applicant’s qualifying employees to be –
(a) exempt from tax; or
(b) taxed at a reduced rate specified by the Minister,
for a period determined by the Minister.
Application for approval
5. (1) A film company may apply to the FAVC for the Minister’s approval under
paragraph 4.
(2) An application under subparagraph (1) must be in the prescribed form and must
include –
(a) the full name and address of the film company;
(b) the full name, address, nationality and country of usual residence of each
qualifying employee concerned and the amount of emoluments payable by
the film company while the employee is engaged in the Fiji Islands;
(c) the total amount of emoluments that the film company proposes to pay to
local employees who would be engaged by it;
(d) the total amount the film company proposes to expend on local goods and
services and a brief description of the goods and services in respect of which
this amount will be used;
(e) the duration for which the film company will be engaged in making a film in
the Fiji Islands;
(f) the title of the film and brief particulars of the script; and
(g) the location where the film company will be engaged during the making of
the film in the Fiji Islands.
FAVC must consider applications and make recommendation
6. (1) The FAVC must consider each application and refer it to the Minister together with
its recommendation in respect of the application.
(2) The FAVC may, before making a recommendation to the Minister, require an
applicant to provide additional information or particulars in order that it may properly consider the
application.G/SCM/Q3/FJI/7
Page 5
Minister may approve or reject an application
7. (1) The Minister must, on receiving from the FAVC an application and its
recommendation, consider them and, by written notice to the FAVC, may approve or refuse the
application.
(2) The Minister’s approval under subparagraph (1)(a) must specify –
(a) the qualifying employees whose income is exempt from tax;
(b) the qualifying employees whose income is chargeable to tax
at a reduced rate;
(c) in respect of subparagraph 4(b) – the reduced rate of tax
determined by the Minister; and
(d) the period during which the exemption or reduced rate of tax
applies.
FAVC must inform applicant
8. The FAVC must, by written notice –
(a) inform the applicant of the Minister’s decision; and
(b) if the Minister approves an application, provide the Commissioner with a
copy of the approval.
Method of relief if approval is granted
9. The amount of tax payable by each qual ifying employee is the lesser of –
(a) the amount of tax assessed in accordance with the general provisions of this
Act; or
(b) the amount of tax assessed in accordance with the Minister’s approval under
paragraph 4.
Commissioner may require security
10. An approved film company may be required by the Commissioner to provide a suitable
security in favour of the Commissioner on the basis of tax payable by its qualifying employees under
paragraph 9.
PART III – AUDIO-VISUAL INCENTIVES
Division 1 – INTERPRETATION
Definitions
11. (1) In this Part, unless the context otherwise requires –
“applicant” means an applicant for a provisional or final certificate who is a resident
individual, a resident partnership or a company incorporated in the Fiji Islands but
excludes –
(a) a holder of a broadcast licence in television or radio in the
Fiji Islands or any associated company or individual with
substantial holdings in a broadcast licence in the Fiji Islands;
andG/SCM/Q3/FJI/7
Page 6
(b) a theatrical exhibitor in the Fiji Islands or any associated
company or individual with substantial holdings in a theatre
or group of theatres in the Fiji Islands;
“approved financing charges” means the reasonable budgeted and approved cost of
financing an audio-visual production and includes legal fees for financing, brokeragefor financing, prospectus or offer document costs and disbursements if those charges
do not exceed 8% of the production budget of an audio-visual production;
“approved marketing materials costs” means the reasonable budgeted and approved
cost of generating matters for marketing materials if not less than 85% of the
expenditure to produce such items is spent in the Fiji Islands and the budgets have
been approved by the FAVC;
“audio recording” means an audio recording for commercial sale on disk, audio
cassette or on-line services and includes music, a voice recording of spoken word, a
book on tape or CD and a dramatic performance in any language;
“Audio-Visual Collection” means an archive of international standard to preserve,
maintain and manage the audio-visual production of the Fiji Islands established by
the FAVC;
“audio-visual production” has the meaning given to it in paragraph 12;
“audio-visual production account” means, in relation to an audio-visual production,
an account that opened in a Fiji Islands bank for the purpose of audio-visual
production and from which withdrawals may only be made for expending audio-
visual production costs;
“audio-visual production costs” means, in relation to an audio-visual production,
monies expended directly –
(a) in producing the audio-visual production;
(b) on approved financing charges; and
(c) on approved marketing materials costs;
“audio-visual production levy” means a fee prescribed by the FAVC included in the
budget of every qualifying audio-visual production payable to the FAVC to support
its operations and the educational aims of the Audio-Visual School and activities of
the Audio-Visual Collection;
“Audio-Visual School” means an educational tertiary institute for citizens and
citizens of other Pacific island countries to provide education in the skills of the
audio-visual industry established by the FAVC;
“AVP” means audio-visual production;
“broadcast television programmes” means programmes produced on film or video
tape, or digitally recorded for broadcast on free-to-air, free satellite or pay television,
and includes television movies, mini series, drama series, situation comedy series,
documentaries and documentary series, educational programmes and series,animation series and current affairs series;G/SCM/Q3/FJI/7
Page 7
“citizen” means a citizen of the State;
“completion bond” means an insurance policy ensuring completion of an audio-visual
production for the benefit of the production entity and investors;
“completion bond company” means a company specialising in insuring and managing
the risk associated with audio-visual production with operations and offices in the FijiIslands which has in place necessary underwri ting arrangements with internationally
recognised insurance companies;
“computer software” means an interactive product or instruction set,  operating
system, manufacturing system, manufacturer controller set or communications
protocol for use in or use such as computers, modems, play stations and other games
consoles, televisions, video players, digital equipment, telecommunication devices,
web servers, CD rom drives and stored on media including CD disk, Zip disk,computer disk, digital video disk, computer chip or online or any other electronic
equipment and includes games, educational products and business products produced
for sale, products for research and design and development, and the establishment
software costs of a commercial operation, online e-commerce businesses, websites or
internet businesses;
“direct to video or video disk programme” means a programme produced for
marketing to the public by retail sale produced specifically for home use;
“F1 audio-visual production” means an audio-visual production which qualifies under
Division 4;
“F2” audio-visual production” means an audio-visual production which qualifies
under Division 4;
“Fiji Islands bank” means a financial institution licensed under the Banking Act
1995;
“final certificate” means a certificate issued under Division 3;
“gross international and domestic revenues” means the revenues derived from the
commercial exploitation of an audio-visual production (including advances, licence
fees and royalties) collected by a collection agent or by other FAVC approved
arrangements on behalf of international sales agents, distributors (including the
production company where it performs that function) and their sub-agents (including
associated companies or entities operating at arm’s length);
“large format  film” means a film produced in 70mm for exhibition in IMAX,
IWERKS, SHOWSCAN and other 15/70, 81/70 and 4/70 large format theatres and
ride simulators;
“marketing materials”, in relation to an audio-visual production, includes –
(a) broadcast television commercials (no more than
2 commercials per audio-visual production);
(b) radio commercials (no more than 2 commercial per audio-
visual production);G/SCM/Q3/FJI/7
Page 8
(c) film art for advertising including posters,
(d) press kit masters;
(e) electronic press kits;
(f) internet websites;  and
(g) film trailers;
“production entity” means an applicant entity which has been granted a provisional
certificate or a final certificate;
“provisional certificate” means a certificate issued under Division 2;
“qualifying audio-visual production” means an F1 or F2 audio-visual production that
has been made –
(a) wholly or substantially in the Fiji Islands and has significant
and substantial Fiji Islands content; or
(b) in pursuance of an agreement or arrangement entered into
between the Government or an authority of the Government and the
Government of another country;
“relevant 24 months period” in relation to an audio-visual production, means the
period of 24 months after the end of the year of assessment in which monies of acapital nature were first expended as audio-visual production costs, or by way of
contribution to those costs;
“short film” means a film produced for exhibition in theatres and at festivals with a
running time of less than 60 minutes and intended primarily as a demonstration of
new and emerging film-making talent;
“studio city company” means the company that owns or leases the land declared as a
studio city zone;
“studio city zone” means the land (including any buildings situated or erected on that
land) declared as such by the Minister under paragraph 45, and includes a temporary
studio city zone;
“temporary studio city zone” means land (including any buildings situated or erected
on that land) declared as such by the Minister under paragraph 45;
“theatrical feature film” or “feature film” means a film intended to be produced for
initial release in theatres.
(2) For the purposes of the definition of “gross international and domestic revenues”, the
income is net of any deduction of the distributor in a specific country/place but no other deductions.
Audio-visual productions
12. Subject to paragraphs 13 to 15, “audio-visual production” means the production, wholly or
principally for exhibition or sale, or use in the conduct of business, of –G/SCM/Q3/FJI/7
Page 9
(a) a large format film in large format theatres;
(b) a theatrical film or a short film in cinemas;
(c) broadcast television programmes by –
(i) broadcast on free-to-air, satellite or pay television; or
(ii) internet broadcast;
(d) a direct-to-video and video disk programme;
(e) an audio recording;
(f) computer software; and
(g) interactive websites and other e-commerce and telecommunications
operations.
Deemed audio-visual productions
13. For the purposes of this Part, the development and establishment of e-commerce websites and
e-commerce businesses is deemed to be an audio-visual production.
Exclusions from references to audio-visual productions
14. For the purposes of Divisions 2 to 6, a reference to an audio-visual production does not
include a reference to an audio-visual production that is or is intended to be to a substantial extent –
(a) an audio-visual production for exhibition as an advertising programme or a
commercial other than where that advertising programme or commercial is
part of the marketing budget of an audio-visual production and is only
advertising the audio-visual production which has funded it;
(b) an audio-visual production for exhibition as a discussion programme, a quiz
programme, a panel programme, a variety programme or a programme of like
nature;
(c) an audio-visual production which is substantially (more than 50%) of a public
event; and
(d) an audio-visual production produced principally as a training aid.
Further exclusions from references to audio-visual productions
15. For the purposes of Divisions 2 to 6, a reference to an audio-visual production does not
include a reference to an audio-visual production that is or is intended to be –
(a) an extension of broadcast television programmes beyond the first 26 episodes
of a continuing series;
(b) an extension of broadcast television programmes and television movies
beyond 2 full length films in a continuing series;
(c) more than 2 audio recordings by the same artist or substantially the same
artist;G/SCM/Q3/FJI/7
Page 10
(d) more than one short film by an individual director.
References to audio-visual production
16. In this Part, unless a contrary intention appears, a reference to an audio-visual production
includes a reference to a proposed audio-visual production.
Division 2 – PROVISI ONAL CERTIFICATES
Application for provisional certificate
17. An applicant may apply to the Commission for a provisional certificate stating that a
proposed audio-visual production will, when complete, be a qualifying audio-visual production for the
purposes of this Part.
Form of application
18. An application under paragraph 17 must be –
(a) in the prescribed form and accompanied by the prescribed fee;
(b) signed by or on behalf of the applicant; and
(c) accompanied by such information as the FAVC requires.
FAVC to consider and decide applications
20. (1) Upon receiving an application under paragraph 17, the FAVC must consider it and
either approve or refuse it.
(2) The FAVC must not approve an application unless it is satisfied that –(a) the proposed audio-visual production, when complete, will be a qualifying
Fiji Islands audio-visual production; and
(b) having regard to the role of the applicant in the proposed production of the
audio-visual production, the applicant is an appropriate individual,
partnership or company to whom a provisional certificate should be issued in
respect of the proposed audio-visual production.
FAVC to issue provisional certificate or give notice of refusal
20. The FAVC must –
(a) if it approves the application - issue a provisional certificate to the applicant
in respect of the proposed audio-visual production; or
(b) if it refuses the application - give written notice to the applicant of its refusal
of the application.
Information to be provided to FAVC
21. A production entity issued with a provisional certificate must furnish to the FAVC in writing,
within a period specified by the FAVC, any info rmation in relation to the proposed audio-visual
production as the FAVC requests.
FAVC may revoke or vary certif icate in certain circumstances
22. If the FAVC has issued a provisional certificate and –G/SCM/Q3/FJI/7
Page 11
(a) at any time after the issue of the certificate, the FAVC becomes satisfied that
the proposed audio-visual production in respect of which the certificate was
issued does not comply with the certificate in any respect; or
(b) the production entity fails to comply with a request for information made by
the FAVC under paragraph 21,
the FAVC may, by written notice to the person to whom the provisional certificate
was issued –
(i) revoke the provisional certificate with effect from the date of the certificate's
issue; or
(ii) in the case of a qualifying audio-visual production which is an F1 AVP –
vary its audio-visual production status be varied from F1 to F2.
Revocation does not prevent subsequent issue of certificate
23. The revocation of a provisional certificate in respect of a proposed audio-visual production
does not prevent the issue of a further provisional certificate in respect of that proposed audio-visual
production.
Certificate deemed to be in force from time of issue
24. Subject to paragraphs 22 and 25, a provisional certificate is deemed to have been in force at
all times from the date of its issue.
Certificate lapses unless application for final certificate made
25. If an application for a final certificate in respect of an audio-visual production is not made in
accordance with Division 3 before the expiration of 6 months after the time when the audio-visual
production is completed, a provisional certificate in respect of that audio-visual production is deemed
never to have been in force.
Division 3 – FINAL CERTIFICATES
Application for final certificate
26. An applicant may apply to the FAVC for a final certificate stating that an audio-visual
production that has been completed is a qualifying audio-visual production for the purposes of this
Part.
Method of application
27. An application under paragraph 26 must be –
(a) in the prescribed form and accompanied by the prescribed fee;
(b) signed by or on behalf of the applicant; and
(c) accompanied by such information as the FAVC requires.
FAVC to consider and decide applications
28. (1) If an application is made under paragraph 26, the FAVC must consider it and either
approve or refuse it.
(2) The FAVC must not approve an application unless it is satisfied that –
(a) the audio-visual production is a qualifying audio-visual production; andG/SCM/Q3/FJI/7
Page 12
(b) having regard to the role of the applicant in the production of the audio-visual
production, the applicant is an appropriate individual, partnership or company
to whom a final certificate should be issued.
FAVC to issue final certificate or give notice of refusal
29. The FAVC  must, on receiving written notice under paragraph 32 –
(a) if it approves the application – issue a final certificate to the applicant in
respect of the audio-visual production; or
(b) if it refuses the application – give writ ten notice to the applicant of its refusal
of the application.
Information to be provided to the FAVC
30. A production entity issued with a final certificate must furnish to the FAVC in writing, within
a period specified in writing by the FAVC, such information in relation to the proposed audio-visual
production as the FAVC requests.
FAVC may revoke or vary certif icate in certain circumstances
31. If the FAVC has issued a final certificate and –
(a) at any time after the issue of the certificate, the FAVC becomes satisfied that
the audio-visual production in respect of which the certificate was issued
does not comply with the certificate in any respect; or
(b) the production entity fails to comply with a request for information made by
the FAVC under paragraph 30,
the FAVC may, by written notice to the person to whom the final certificate was issued –
(i) revoke the final certificate with effect from the date of the certificate's issue;
or
(ii) in the case of a qualifying audio-visual production which is an F1  AVP -
vary its audio-visual production status from F1 to F2.
Revocation does not prevent subsequent issue of certificate
32. The revocation of a final certificate in respect of a completed audio-visual production does
not prevent the issue of a further final certificate in respect of that completed audio-visual production.
Final certificate deemed to be in force from time of issue
33. Subject to paragraph 31, a final certificate is deemed to have been in force at all times from
the date of its issue.
Division 4 – QUALIFYING AUDIO-VISUAL PRODUCTIONS
AVP may qualify as F1 or F2 AVP
34. An audio-visual production qualifies as an F1 AVP or an F2 AVP if –
(a) it satisfies the minimum prerequisites set out in paragraph 35; and
(b) it satisfies the additional criteria set out in paragraph 36, in the case of F1
AVPs, or paragraph 37, in the case of F2 AVPs.G/SCM/Q3/FJI/7
Page 13
Minimum prerequisites for F1 and F2 AVPs
35. The minimum prerequisites for an audio-visual production to qualify as an F1 AVP or an F2
AVP are –
(a) 100% of the production budget must be deposited in an audio-visual
production account prior to the commencement of the production;
(b) 100% of the gross international and domestic revenues disbursed to investors,
distributors and sales agents, producers, creative profit participants and any other
parties must pass through a Fiji bank account prior to any disbursement and the
Commissioner is provided with half yearly statements of income and disbursement;
(c) either –
(i) in the case of an audio-visual production – the appropriate
audio-visual production levy must be paid on the first day of
pre-production or full financing, whichever is the sooner;
or –
(ii) in the case of a proposed audio-visual production – the
production budget contains an audio-visual production levywhich must be paid on the first day of pre-production or full
financing, whichever is the sooner;
(d) the audio-visual production is not, in the opinion of the FAVC, culturally
derogative in its portrayal of the Fiji Islands or the people of the Fiji Islands;
(e) the audio-visual production must be produced by a production entity;(f) the audio-visual production must have a completion bond from a company at
arm’s length to the production company and approved by the FAVC as an
acceptable completion bond company;
(g) the audio-visual production has a certificate from the completion bond
company confirming that –
(i) the budget does not contain fees or costs which are not
commercial;
(ii) either –
(aa) in the case of a completed audio-visual production – 
the production entity has in its best endeavours used 
suitably qualified Fiji Islands employees and 
facilities and locations;
or –
(bb) in the case of a proposed audio-visual production – 
the production entity has in its best endeavours 
budgeted and researched to use suitably qualified Fiji
Islands employees and facilities and locations;G/SCM/Q3/FJI/7
Page 14
(iii) producer fees and overheads paid or payable to the
production entity for services of production do not exceed
12½% of the total budget;
(iv) expenses paid to the production entity or non-arm’s length
parties associated with the production are or will be genuineand reasonable reimbursement of costs;
(v) approved financing charges and approved marketing
materials costs will be, or have been, spent in accordance
with this Part;
(vi) all expenses, allowances, wages and fees for service in the
budget are commercial and have been, or will be, paid for
services rendered on the audio-visual production; and
(vii) the audio-visual production has been, or will be able to be,
completed within the relevant 24 months period.
Additional criteria to be satisfied for F1 status
36. (1) In addition to meeting the minimum prerequisites set out in paragraph 35, an audio-
visual production qualifies as an F1 AVP if –
(a) one of the following criteria is satisfied –
(i) a large format film, a feature film, a short film, broadcast
television, a direct to video or video disk programme is
directed, written or based on the creative idea of a citizen ora resident;
(ii) an audio recording is produced or composed by or is the
performance principally of a resident or citizen;
(iii) computer software is based on the original creative idea
developed by a resident or citizen; or
(iv) the content satisfies the guidelines set down by the FAVC
from time to time for being a portrayal of the Fiji Islands, the
history and life of the people of the Fiji Islands and Fiji’s
flora and fauna,
and –
(b) the following criteria are satisfied –
(i) the production entity has secured for the audio-visual
production, to the satisfaction of the FAVC and on
commercial terms, distribution for the production when
complete both in the Fiji Islands and in at least one
significant international market; and
(ii) one of the levels of expenditure in subparagraph (2) has
been, or is budgeted to be, spent in the Fiji Islands.G/SCM/Q3/FJI/7
Page 15
(2) The levels of expenditure for the purposes of subparagraph (1)(b)(ii) are –
(a) for an audio-visual production which commences production between
1 January 2001 and 31 December 2004 (both dates inclusive) – not less than
–
(i) 35% for a large format film, a feature film or broadcast
television programmes;
(ii) 45% for a direct to video programme or video disk
programme; and
(iii) 50% for an audio recording or a computer software;
(b) for an audio-visual production which commences production between
1 January 2005 and 31 December 2008 (both dates inclusive) – not less than–
(i) 55% for a large format film, a feature film or broadcast
television programmes;
(ii) 75% for a direct to video programme or video disk
programme; and
(iii) 80% for an audio recording or computer software;
(c) for an audio-visual production which commences production on or after
1 January 2009 – not less than –
(i) 65% for a large format film, a feature film or broadcast
television programme;
(ii) 85% for a direct to video programme or video disk
programme; and
(iii) 80% for an audio recording or a computer software.
Additional criteria to be satisfied for F2 status
37. In addition to meeting the minimum prerequisites set out in paragraph 35, an audio-visual
production qualifies as an F2 AVP if –
(a) the production entity has secured for the audio-visual production, to the
satisfaction of the FAVC and on commercial terms, distribution for the
production when completed both in the Fiji Islands and in at least
2 significant international markets;
(b) one of the following amounts is guaranteed as a secured minimum return on
investment from international distribution to Fiji Islands investors –
(i) for an audio-visual production which commences production
between 1 January 2001 and 31 December 2004 (both dates
inclusive) – not less than –
(aa) 5% for a large format film;G/SCM/Q3/FJI/7
Page 16
(bb) 15% for a feature film;
(cc) 20% for broadcast television programmes;
(dd) 25% for a direct to video programme or  video disk programme; and
(ee) 15% for an audio recording or a computer software.
(ii) for an audio-visual production which commences production
between 1 January 2005 and 31 December 2008 (both dates
inclusive) – not less than –
(aa) 25% for a large format film;
(bb) 35% for a feature film;
(cc) 40% for broadcast television programmes;
(dd) 45% for a direct to video programme or video disk programme; and(ee) 30% for an audio recording or a computer software;
(iii) for an audio-visual production which commences production
on or after 1 January 2010 – not less than 45%; and
(c) one of the following levels of expenditure has been, or is budgeted to be,
spent in the Fiji Islands –
(i) for an audio-visual production which commences production
between 1 January 2001 and 31 December 2004 (both dates
inclusive) – not less than –
(aa) 35% for a large format film, a feature film or broadcast television 
programmes;
(bb) 40% for a direct to video programme or video disk programme; and
(cc) 45% for an audio recording or a computer software;
(ii) for an audio-visual production which commences production
between 1 January 2005 and 31 December 2008 (both dates
inclusive) – not less than –
(aa) 45% for a large format film, a feature film or  broadcast television 
programmes;
(bb) 55% for a direct to video programme or  video disk programme; and
(cc) 60% for an audio recording or a computer software;
(iii) for an audio-visual production which commences production
on or after 1 January 2009 not less than –
(aa) 55% for a large format film, a feature film or a broadcast television 
programmes;
(bb) 65% for a direct to video programme or video disk programme; and(cc) 65% for an audio recording or a computer software.
Criteria for determining Fiji Islands content of AVP
38. In determining whether an F1 or F2 AVP has, or will have, significant and substantial Fiji
Islands content for the purposes of it being a qualifying audio-visual production, the FAVC must haveregard to –
(a) the subject-matter of the audio-visual production;G/SCM/Q3/FJI/7
Page 17
(b) the place where the audio-visual production was, or will be, made;
(c) the nationalities and places of residence of –
(i) the persons who took part, or will take part, in the making of
the audio-visual production (including actors, authors,
composers, designers, directors, editors, musicians,producers, script writers, singers and technicians);
(ii) the persons who are, or will be, the beneficial owners of the
copyright in the audio-visual production; and
(iii) the persons who are, or will be, the beneficial owners in any
shares in any company concerned in the making of the audio-
visual production;
(d) the source from which monies that were used in the making of the audio-
visual production were, or that are to be used in the making of the proposed
audio-visual production will be, derived;
(e) details of the production expenditure  incurred, or the budgeted production
expenditure to be incurred, in respect of the audio-visual production; and
(f) any other matter the FAVC considers relevant.
Division 5 – DEDUCTIONS FOR CAPITAL EXPENDITURE ON
AUDIO-VISUAL PRODUCTIONS
Deduction for capital expenditure
39. Subject to this Division, if a taxpayer during a year of assessment expends monies of a capital
nature, under a contract entered into on or after 1 January 2001, by way of contribution to the audio-visual production costs in respect of a qualifying audio-visual production, and –
(a) at the time when the monies were expended a provisional certificate or a final
certificate was in force in relation to the audio-visual production;
(b) the Commissioner is satisfied that, when the  monies were expended –
(i) the taxpayer expected to become the first owner, or one of
the first owners, in the copyright in the audio-visual
production when the copyright came into existence; and
(ii) the taxpayer intended to use that copyright, or the taxpayer’s
interest in that copyright, for the purpose of producing
income from the commercial exploitation of the copyright;
(c) by reason of the monies being expended, the taxpayer became the first owner,
or one of the first owners, of the copyright in the audio-visual production ;and
(d) either of the following conditions is applicable –G/SCM/Q3/FJI/7
Page 18
(i) the taxpayer has used the copyright, or the taxpayer’s interest
in the copyright, for the purpose of producing income from
the commercial exploitation of the copyright;
(ii) the taxpayer derived income under an agreement entered into
before the copyright came into existence under which thetaxpayer agreed, upon the copyright coming into existence,
to grant rights to another person to exploit the copyright in a
commercial manner, an amount must be allowed as a
deduction in the assessment of the taxpayer in respect of the
income in the year the monies are expended, being an
amount equal to –
(A) in the case of an F1 AVP – 150% of the monies expended; or
(B) in the case of an F2 AVP – 125% of the monies expended.
Deduction in event of taxpayer’s death
40. If, in relation to a qualifying audio-visual production to which paragraph 39 otherwise
applies, a taxpayer dies before copyright in the audio-visual production comes into existence andeither of the following conditions is satisfied –
(a) before the taxpayer died, the taxpayer derived income under an agreement
under which the taxpayer agreed, upon the copyright coming in to existence,
to grant rights to another person to commercially exploit the copyright; or
(b) the Commissioner is satisfied that, if the taxpayer had not died –
(i) the taxpayer would have become the first owner, or one of
the first owners, in the copyright in the audio-visual
production by reason of the monies having been expended;
and
(ii) the taxpayer would have used that copyright or the
taxpayer’s interest in that copyright for the purpose of
producing income from the commercial exploitation of that
copyright,
an amount must be allowed as a deduction in the assessment of the taxpayer’s estate
in respect of the year of income in which the taxpayer died, being an amount equal
to –
(A) in the case of an F1 AVP – 150% of the monies expended; or
(B) in the case of an F2 AVP – 125% of the monies expended.
Licensees may not claim deduction
41. A taxpayer, being a production entity, which is a licensee for the purposes of Division 7, may
not claim a deduction under this Division.
Division 6 – TAXATION OF AUDIO-VISUAL INCOME
Tax exemption of income derived from qualifying AVP
42. Subject to paragraph 43, if a taxpayer expends monies of a capital nature, under a contract
entered into on or after 1 January 2001, by way of contribution to the audio-visual production costs in
respect of a qualifying audio-visual production, the income derived by the taxpayer from theG/SCM/Q3/FJI/7
Page 19
commercial exploitation of the copyright is exempt from tax until the taxpayer has received, from the
commercial exploitation, a return of –
(a) in the case of an F1 AVP – 60% of the monies expended; or
(b) in the case of an F2 AVP – 50% of the monies expended,and thereafter all income so derived must be included in total income.
Sale of copyright interest
43. A taxpayer who sells a copyright interest in an audio-visual production, in respect of which a
deduction under Division 5 has been claimed, must include the gross receipts of the sale in total
income.
Division 7 – ST UDIO CITY ZONE
Definitions
44. In this Division, unless the context otherwise requires –
“applicant” means a sole proprietor, a partnership or a company which makes an
application for an audio-visual operating licence;
“audio-visual operating licence” means a licence issued under paragraph 49;
“company” means a company incorporated in the Fiji Islands carrying on a business
of audio-visual production or supplying serv ices to audio-visual productions in the
Fiji Islands and which has as its primary operating location the studio city zone;
“licensee” means a sole proprietor, a partnership or a company holding an audio-
visual operating licence;
“partnership” means a partnership of 2 or more residents  carrying on a business in
the Fiji Islands of audio-visual production or supplying services to audio-visualproductions in the Fiji Islands and which has as its primary operating location the
studio city zone;
“production activity” means any activity in the production, world-wide distribution,
conduct of business or supply of services to the production of audio-visual
productions in the Fiji Islands;
“sole proprietor” means a resident carrying on a business in the Fiji Islands of  audio-
visual production or supplying services to audio-visual productions in the Fiji Islandsand whose business has as its primary operating location the studio city zone.
Minister may declare studio city zone
45. (1) Subject to other provisions of this paragraph, the Minister may, declare by notice in
the Gazette  any area of land (including any buildings situated or erected on that land) in the Fiji
Islands to be a studio city zone for the purposes of this Part.
(2) Subject to the issue of a licence required under any written law, a studio city zone
may be declared for the purposes of the development of infrastructure, services and resources for the
audio-visual industry and tourist attractions, hotels, residential accommodation, sporting facilities,
amusement parks.G/SCM/Q3/FJI/7
Page 20
(3) The Minister may declare, by notice published in the Gazette , any area of land
(including buildings situated or erected on that land) in the Fiji Islands to be incorporated into and to
form part of the studio city zone.
(4) The Minister may not declare more than one studio city zone at any time.(5) The Minister may declare, by notice published in the Gazette , any area of land
(including any buildings situated or erected on that land) in the Fiji Islands to be a temporary studio
city zone for the purposes of this Part in order that the land (and buildings) may be used by a licensee
as an interim facility prior to the construction and completion of the relevant facility in the studio city
zone.
(6) A temporary studio city zone ceases upon the completion of the studio city zone in
respect of which the temporary studio city zone is used as an interim facility.
FAVC may approve application for operating licence in studio city zone
46. The FAVC may approve, in accordance with this Division, an application by a sole
proprietor, a partnership or a company for an audio-visual operating licence authorising the carrying
on of a production activity in the studio city zone.
Method of application
47. An application under paragraph 46 must be –
(a) made to the FAVC in writing in the prescribed form and accompanied by the
prescribed fee;
(b) signed by or on behalf of the applicant; and(c) accompanied by such information as the FAVC requires.
FAVC to consider and decide applications
48. (1) If an application is made under paragraph 46, the FAVC must consider it and may
approve or refuse the application.
(2) The FAVC must not approve an application unless it is satisfied that –
(a) the applicant has entered into a contract to operate from facilities in the studio
city zone and will produce, distribute or contribute specialised services to the
production and distribution of  audio-visual productions;
(b) the applicant’s production activity will generate employment opportunities
for the people of the Fiji Islands; and
(c) the applicant’s production activity will enhance, expand and improve the
technological and trading capability and capacity of the economy of the Fiji
Islands.
(3) The FAVC may approve an application su bject to the applicant complying with any
other condition the FAVC considers to be appropriate.
FAVC to issue audio-visual operating licence or give notice of refusal
49. The FAVC  must –G/SCM/Q3/FJI/7
Page 21
(a) if it approves an application – issue an audio-visual operating licence,
including any conditions imposed by it; or
(b) if it refuses the application – give writ ten notice to the applicant of its refusal
of the application.
FAVC may vary conditions of audio-visual operating licence
50. (1) The FAVC, may, of its own accord, or upon the written request of a licensee, if it
considers it appropriate in the circumstances, vary the conditions of an audio-visual operating licence.
(2) The FAVC must, by written notice, inform a licensee of a variation in the conditions
of the licensee’s audio-visual operating licence and the variation is deemed to be effective from the
date the notice is received by the licensee.
FAVC may approve transfer of audio-visual operating licence
51. (1) A licensee may apply to the FAVC in the prescribed form for its operating licence to
be transferred to another sole proprietor, a partnership or a company.
(2) The FAVC may require the licensee or the proposed transferee to provide any other
information as the FAVC requires in order for it to consider the transfer application.
(3) The FAVC may –(a) approve the transfer of the licensee’s audio-visual operating licence; or
(b) refuse the application.
(4) The FAVC may not approve a transfer of an audio-visual operating licence unless it is
satisfied that the proposed transferee satisfies the criteria set out in paragraph 48(2).
(5) The FAVC must give written notice to the licensee of its decision under subparagraph (3).
FAVC may revoke an audio-visual  operating licence
52. (1) The FAVC may give written notice to a licensee that it intends to revoke the
licensee's audio-visual operating licence if –
(a) there has been a breach of the audio-visual operating licence;
(b) there has been non-compliance with any condition of the audio-visual
operating licence; or
(c) the licensee is convicted of an offence against this Act, the Value Added Tax
Decree 1991 or the Customs Act 1986.
(2) If the FAVC gives written notice under subparagraph (1), it must inform the licensee of the
licensee’s right to make representations to the FAVC on or before a date specified by the FAVC,being not less than 21 days from the day that notice is given under subparagraph (1).
(3) If a licensee makes representations under subparagraph (2), the FAVC must consider them
and may by written notice to the licensee, withdraw its notice under subparagraph (1).
(4) If the FAVC does not withdraw its recommendation in accordance with subparagraph (3), or
the licensee does not make any representations by the specified date the FAVC may, by written noticeG/SCM/Q3/FJI/7
Page 22
to the licensee, revoke the audio-visual operating licence from a date (being not less than 14 days and
not more than 42 days from the date of the notice).
Register of operating licences
53. (1) The FAVC must establish and maintain a register of all audio-visual operating
licences and there must be entered in the register in respect of each audio-visual operating licence –
(a) the date of commencement of the audio-visual operating licence;
(b) the name, registered address and authorised representative of the sole
proprietor, partnership or company to which the audio-visual operating
licence was granted; and
(c) the production activity relating to the audio-visual operating licence.(2) The register must be kept at the FAVC’s principal office and be open to inspection
during the times the FAVC directs, subject to the payment of the prescribed fee for each inspection.
Transfer must be registered within 7 days
54. If an audio-visual operating licence is transferred under paragraph 51, the sole proprietor,
partnership or company to which it is transferred must within 7 days of the transfer, submit its name
and address, and the name and address of its authorised representative, for inclusion in the register.
Exemption from tax of licensee’s production activity income
55. An audio-visual operating licence exempts the licensee from the payment of income tax under
this Act (except for withholding tax) on any income derived by the licensee from the production
activity with effect from the commencement of the audio-visual operating licence.
Non-AVP and distribution income subject to tax
56. Any income of a licensee that is not derived from a production activity must be charged to tax
in accordance with the other provisions of this Ac t notwithstanding the business being located in the
studio city zone.
Tax assessable on sale of company or business in studio city zone
57. (1) In respect of any business activity carried out pursuant to this Division and
notwithstanding any other provision of this Act, tax must be assessed, levied and paid, at the rate set
out in subparagraph (2), in respect of any income from –
(a) the sale of shares in a licensee ; or
(b) the sale of the licensee’s business or part of a business, if the sale occurs less
than 8 years after the commencement of the business.
(2) The rate at which tax must be assessed, levied and paid under subsection (1) is –
(a) if the sale occurs within 2 years after the commencement of the
business –20%;
(b) if the sale occurs within 4 years after the commencement of the
business – 15%;
(c) if the sale occurs within 6 years after the commencement of the
business –10%; orG/SCM/Q3/FJI/7
Page 23
(d) if the sale occurs within 8 years after the commencement of the
business –2½%.
Division 8 – TAXATION CONCESSIONS TO RESIDENTS OF THE STUDIO CITY ZONE
Definitions
58. For the purposes of this Division, unless the context otherwise requires –
“audio-visual earnings” means –
(a) income derived from work in AVPs including contracted fees, wages,
royalties and distributions of profits from AVPs but does not include any
income from an AVP in respect of which a deduction has been claimed under
Division 5; and
(b) income from sports performances including prize money, performance fees
and endorsements.
FAVC may approve individuals for studio city zone benefits
59. (1) The FAVC may approve an individual to enjoy the benefits specified in
subparagraph (2) if –
(a) the individual indicates his or her intention to reside in the studio city zone;
(b) the individual derives audio-visual earnings; and
(c) the individual complies with the requirements of this Division.
(2) The earnings derived by an individual approved by the FAVC under subparagraph (1)
are exempt from tax.
Applications by non-citizens
60. An application under this Division by an indi vidual who is not a citizen must be made in
writing to the FAVC in the prescribed form and accompanied by the prescribed fee and mustinclude –
(a) confirmation that the applicant’s country of citizenship is other than the Fiji
Islands;
(b) confirmation of a contract to take up residence at the studio city zone;
(c) confirmation and certification by a chartered accountant holding a certificate
of public practice of –
(i) pre-tax annual audio-visual earnings in excess of $100,000;
and
(ii) assets held in the studio city zone in excess of $250,000 in
either real estate, tangible business assets including stock,
plant and equipment and tools of trade, or other valuable andconfirmable assets excluding cash and other liquid assets.
Requirements and conditions  for tax exemption
61. An individual, who is not a citizen, approved by the FAVC is not eligible to claim in a year of
assessment the tax exemption under paragraph 64(1) unless the individual –G/SCM/Q3/FJI/7
Page 24
(a) is resident in the studio city zone for a period or periods in aggregate of at
least 60 days in the year of assessment;
(b) maintains a permanent place of residence in the studio city zone during the
year of assessment; and
(c) provides to the Commissioner confirmation and certification by a chartered
accountant holding a certificate of public practice of –
(i) pre-tax audio-visual earnings in excess of $100,000 in the
year of assessment; and
(ii) assets held during the year of assessment in the studio city
zone in excess of $250,000 in either real estate, tangible
business assets including stock, plant and equipment andtools of trade, or other valuable and confirmable assets
excluding cash and other liquid assets.
Applications by citizens
62. An application under this Division by a citizen must be made in writing to the FAVC in the
prescribed form and accompanied by the prescribed fee and must include –
(a) confirmation of a contract to take up residence in the studio city zone;
(b) confirmation and certification by a chartered accountant holding a certificate
of public practice of –
(i) pre-tax annual audio-visual earnings in excess of $100,000;
and
(ii) assets held in the studio city zone in excess of $250,000 in
either real estate, tangible business assets including but not
limited to stock, plant and equipment and tools of trade, or
other valuable and confirmable assets excluding cash andother liquid assets.
Requirements and conditions for tax exemption
63. An individual, who is a citizen, approved by the FAVC is not eligible to claim in a year of
assessment the tax exemption under paragraph 59(2) unless the individual –
(a) is resident in the studio city zone for a period or periods in aggregate of at
least 183 days in the year of assessment; or, in the case of a citizen whoderives a minimum of 80% of audio vi sual earnings from outside Fiji, is
resident in the studio city zone for a period or periods in aggregate of at least
60 days in the year of assessment;
(b) maintains a primary place of residence in the studio city zone during the year
of assessment; and
(c) provides to the Commissioner confirmation and certification by a chartered
accountant holding a certificate of public practice of –G/SCM/Q3/FJI/7
Page 25
(i) pre-tax audio-visual earnings in excess of $100,000 in the
year of assessment;
(ii) the source of audio visual earnings whether from within Fiji
or from outside Fiji; and
(iii) assets held during the year of assessment in the studio city
zone in excess of $250,000 in either real estate, tangible
business assets including stock, plant and equipment and
tools of trade, or other valuable and confirmable assets
excluding cash and other liquid assets.
FAVC must consider and decide application
64. (1) The FAVC must consider an application made under paragraph 60 or 62 for tax
exemption and may approve or refuse the application for tax exemption.
(2) The FAVC must not approve an application unless –(a) it is satisfied that it is expedient for the development of the audio-visual
industry in the Fiji Islands;
(b) the work in audio-visual productions from which  income is derived is
original and creative and has cultural or creative merit; and
(c) the applicant has complied with all the requirements of this Division.
(3) The FAVC must give written notice  to an applicant of its decision under
subparagraph (1).”
Passed by the House of Representatives this 19
th day of February 2002.
Passed by the Senate this 7th day of March 2002.
NOTE – Compiled by the Office of the Solicitor Ge neral for office use only and it is not responsible
for any omission or liable for reliance on the compiled text.
__________