Pago Pago, AMERICAN SAMOA — The Department of Commerce does not “dictate to a business owner how they should operate” was the response from its Director, Petti Matilla to concerns raised by the Department of Health’s Head of Environmental Health Services Aileen Solaita, about businesses operated by foreigners.

Solaita said this is a “major issue” for their Division.

“Most of the retail stores we have inspected while run and operated by foreigners, yet on the business license it is owned by Samoans.

“The owners are not part of the daily operation and they don’t see first hand the unhygienic and unhealthy conditions some of the stores have, and they should be responsible and held accountable for their businesses.”

Solaita further questioned why are the business licenses are issued to the Samoans yet are operated by foreigners and said “there is something wrong with this picture.”

However the DOC Director explained there are different types of business ownerships registered by the DOC, which involve foreigners as shareholders or partners. 

“Anyone who wishes to operate a business in American Samoa has the option to register as a sole owner (must be a US National or US Citizen), as a partnership, a local corporation, a foreign corporation, a limited liability company or as a non-profit corporation. 

“So, it really depends on how the business is structured to begin with, and the possibility of foreigners as business partners or as employees of the business.”

Adding the concern in question may be considered ‘fronting’ — but the remedy lies in the income tax statutes rather than the licensing statutes.

“In the past, the Internal Revenue Service (IRS) had its revenue agent regularly visit the territory to investigate compliance with the IRS statutes that require an employer to deduct and pay over the employee share of FICA taxes in addition to the employer share of FICA taxes to the IRS. 

“The local Tax Office has the authority to enforce all businesses to comply with the FICA requirements and the reporting of gross sales, other compensation in the form of a license fee or compensation for managing and running a business on behalf of the US National or US Citizen owners.”

According to the Director Matilla, it is possible that the "Samoan owner" is a shareholder of the business with the foreigner and however they agreed to operate the business. 

“DOC does not dictate to a business owner how they should operate. DOC ensures the owner has all the proper licenses in place to operate a business activity regardless of how many types of businesses they own or operate on island. 

Matilla also cited that American Samoa law does not prohibit foreigners from owning businesses in the territory.

“New businesses that are majority-owned by non-US Nationals or non-US Citizens or non-permanent residents are required to be reviewed by the Territorial Planning Commission (TPC) in accordance with Title 27 ASCA and Title 27 ASAC. 

“The TPC has the right to consider the effects of granting a license on economic opportunities for Samoan residents in determining whether to recommend to the Governor that the license should be granted.”

She adds that if there is such a law then ASG might be liable for discrimination.

“Founding or starting a business is a fundamental expression of one of our most basic American freedoms, the right to go into business for oneself, to compete in a local market and make a profit. That's the free enterprise system that we practice under our democratic form of government.”

Furthermore, Matilla pointed out that it while this may be a concern to the DoH inspection team “but first they need to understand the business structure before making any assumptions that a business is operating illegally. 

“Again, DOC does not dictate how a business should operate because it depends on how the business is legally structured (as a sole owner, partnership, foreign corporation, etc.).”