American Samoa granted “Opportunity Zone” status by US Treasury Dept.
Pago Pago, AMERICAN SAMOA — The US Treasury Department has granted American Samoa’s request for the entire territory to be designated as an “Opportunity Zone” — a federal program created under the federal Tax Cuts and Jobs Act “to spur investment in distressed communities throughout” the US.
The US Treasury and its bureau, Internal Revenue Service (IRS) made the official announcement Monday in a national news release announcing the designation of Opportunity Zones to American Samoa and 17 other states and territories.
“This is good news for American Samoa as it provides us with another tool to incentivize investment into American Samoa,” wrote Gov. Lolo Matalasi Moliga in a statement dated Apr. 9th but released Wednesday afternoon, Apr. 11th.
According to the US Treasury, new investments in Opportunity Zones can receive preferential tax treatment.
“With the approval of our request, all of American Samoa is now eligible to benefit from this development program,” which provides tax incentives to investors who invest in an opportunity zone, said Lolo, adding that individual and corporate investors are given the opportunity to defer capital gains taxes when they invest their earnings in the territory.
According to Lolo, additional incentives accrue over five, seven, and ten years if these investments are maintained, thereby promoting the kind of capital that underserved communities so often lack.
The governor said there are trillions of dollars worth of unrealized gains in the capital markets today. If even a portion of those gains is moved to invest in opportunity zones and distressed communities, the program could have a transformative impact.
“Our job now is to capitalize on the program,” Lolo said, adding that he has instructed Commerce Department director Keniseli Lafaele to “take the necessary steps to include this program in the current development initiatives.”
“We must use every tool at our disposal to advance our efforts to diversify our economy and strengthen our infrastructure,” Lolo continued. “We are grateful for this new opportunity and look forward to making it work for the American Samoan people.”
In the national news release, US Secretary of Treasury, Steven T. Mnuchin said "the Trump Administration will continue working with States — including territories — and the private sector to encourage investment and development in Opportunity Zones and other economically disadvantaged areas and boost economic growth and job creation.”
“Attracting needed private investment into these low-income communities will lead to their economic revitalization, and ensure economic growth is experienced throughout the nation,” he continued.
According to a US Treasury information sheet, qualified Opportunity Zones retain this designation for 10 years. Furthermore, investors can defer tax on any prior gains until no later than December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund, an investment vehicle organized to make investments in Qualified Opportunity Zones.
In addition, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for an increase equal to the fair market value of the investment on the date that it is sold.
Treasury and the IRS plan to issue additional information on Qualified Opportunity Funds. The additional guidance will address the certification of Opportunity Funds, which are required to have at least 90% of fund assets invested in Opportunity Zones. More details and information on this program at <www.cdfifund.gov or www.irs.gov>