The new Foreign Exchange Levy to assist fund the Tongan Government’s hosting of the 2019 Pacific Games will come into force from Wednesday, 1 June 2016.
The CEO for the Ministry of Finance and National Planning Tatafu Moeaki said consultation meetings with all the five banks and representatives of the ten licensed foreign exchange dealers since early 2015 had contributed to the enacted legislation and the Foreign Exchange Levy Regulation 2016 to ensure its implementation does not introduce foreign exchange restrictions, lower the levy amount, and lower administration costs by financial institutions.
The new legislation directs every financial institutions, banks, and money transfer operators to collect the levy from every purchase or sale of foreign currency in Tonga.
The levy is calculated as half of one seniti from the spread of every One Pa’anga on the condition that the spread is greater than the levy.”
Financial institutions are required to keep financial records of all foreign exchange purchases and sales; from these records, the levy can be calculated; and on a monthly basis each financial institutions is required to pay over the collected amount to designated accounts at each of the Banks or to the Ministry of Finance and National Planning.
Various examples of foreign exchange transactions, required records to calculate the spread and application of the levy had been a subject of consultations with the financial institutions including the template for the monthly return to ensure effective implementation, compliance and accurate reporting.
Moeaki further stated “the support of the public, business community and cooperation of all the financial institutions and foreign exchange dealers are requested to assist Government fund its hosting responsibilities for the 2019 Pacific Games as Government wants to get more youth playing sport professionally and safely from a young age, and to help them keep playing sport throughout their life.
The Ministry of Finance will continue to assess the implementation of the levy to ensure it does not introduce any restriction to foreign exchange transactions, better compliance and effective regulatory responses.”
The Ministry said it will be happy to clarify as required by the public, business community and key stakeholders.