Tonga’s new Foreign Exchange Levy Act 2015 that came into force on Wednesday last week has disrupted the movement of foreign exchange in and out of the country as bankers do not know how to apply it.

“No-one can tell us what is going on and we have been forced to restrict all foreign currency in and out of the country until we have clarification from Government,” said the manager of the ANZ Tonga, Bernie Poort today.

The Government Foreign Exchange Levy was Gazetted on 21 October but nobody knows how it works, how to apply it or how to collect it, he said.

The banks were advised that the Act was in force, only late on Friday afternoon by the CEO for Finance Tatafu Moeaki, who sent the ANZ Tonga and Bank South Pacifc Tonga managers copies of the new Act and the Gazette.

“Tatafu and the Minister of Finance left the country on Saturday. As did the Governor of the Reserve Bank, Deputy PM, PM, and absolutely no-one can tell us what is going on,” said Bernie.

Crown Law had sent the Act and Gazette to the Finance Ministry on 22 October and wished them, “the best of luck in the enforce and operation of the new Act.”

Penalties

The Foreign Exchange Levy act 2015, assented by King Tupou VI on 15 October, imposes a foreign exchange levy on every financial institution.

The levy is payable in respect of every purchase or sale of foreign currency in Tonga (with the exception of transactions between financial institutions in Tonga).

The levy has to be paid monthly on the fifth working day of the month in respect of the levy payable for the previous month, and paid into an account “to be nominated by the Minister".

Penalties of 10 percent are applied to unpaid amounts.

Banks and financial institutions can be fined up to $5000 for offences under the Act.

The levy was introduced to raise funds for Tonga’s hosting of the South Pacific Games in 2019.