Tax exemption statute to be overhauled says Governor
The American Samoa Government granted tax exemption certificates last year to two locally based companies while the government has begun work on overhauling the Tax Exemption law, which has been a concern for lawmakers and the business community for several years.
Tax exemption was one of the many issues covered in Gov. Lolo Matalasi Moliga’s address to the Fono, saying that his administration has began the process of “creating a conducive and nurturing business environment by reducing and eliminating business red tape.”
He said tax exemptions were awarded to two companies last year based on their contributions to the expansion of the local economy, adding that one tax exemption recipient benefits the tuna canning industry and the other promotes the development of the local tourism industry.
Responding to Samoa News inquiries, the governor’s executive assistant, Iulogologo Joseph Pereira identified the two recipients as the Satala-based can manufacturing company, Ardagh Impress Samoa Inc., which produces all the cans for StarKist and Tri Marine International, and the Airport Duty Free shop, which operates out of the Tafuna airport.
“Both companies contribute to our fisheries and tourism industry development,” Iulogologo said.
In his address to the Fono, the governor said ASG is “aggressively evaluating all existing tax exemptions to businesses to determine compliance and whether the promised economic and social benefits accruing to the government have been fulfilled.”
“Future tax exemptions will be awarded based on the number of jobs created, in addition to other direct economic and social benefits accruing to the people of American Samoa,” the Governor declared.
According to the governor, the tax exemption statute will be overhauled to ensure that the controlling criteria for awarding tax exemptions are clearly defined and quantifiable. Additionally, appropriate legislative changes will be submitted for Fono review and approval.
When the governor reconstituted the new Tax Exemption Board last March, he also provided mandates, such as determining ways to assist current as well as new businesses— to help them flourish without compromising economic revenue streams. He also mandated a review of all companies with current tax exemptions to determine how they are aligning with the purpose of the granted exemption, and how they are making an impact in terms of contributing to economic development.
Faleomavaega has raised with previous administrations the need to reform the tax exemption statute, and last August, he raised the subject again with the new Lolo Administration, saying in order to create an atmosphere of fairness and an “even playing field” within the business community, ASG needs to eliminate the Tax Exemption Board and pass legislation to govern tax incentives and exemptions for companies interested in doing business in the territory.
“The lack of transparency in the granting of tax exempt status to companies deters investment in American Samoa. Businesses need to recognize reliable tax policies before they will consider investing in American Samoa,” he said.
Several lawmakers have also questioned the fairness of granting the tax exemptions, and have called for changes to current law. This has also been the argument by the private sector, through the Chamber of Commerce in testimony before the Fono over the years.