Govt. zeroes in on tourism tax credits

By Joyetter Feagaimaali’i-Luamanu ,

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Prime Minister Tuilaepa Sa’ilele Malielegaoi.

Prime Minister Tuilaepa Sa’ilele Malielegaoi. (Photo: File)

Prime Minister Tuilaepa Sa’ilele Malielegaoi has indicated that the government could revise its tax credit schemes in relation to tourism development.

Speaking to the Sunday Samoan, Tuilaepa said the scheme has deprived the government from collecting much-needed taxes for the development of the nation.

Tuilaepa told the Sunday Samoan the scheme could be eliminated.

Such taxes, he said, is money that should be paid to the government. Millions of tala are involved.

“It’s a tax credit for certain companies on the excuse these companies will invest,” he said. 

“But those infrastructures often delayed which at the same time deprives the government in terms of revenue for our development.”

The scheme is allowed under the Income Tax Amendment Act.

Under Tax Credit Schemes for Hotel Investment, the law says that:

 (1) Subject to section 60(d), a person who invests at least $100,000 in an approved tourism development is allowed a credit against income tax payable for the person’s income at the rate of 100% of the investment (“the credit”).

(2) The credit is allowed subject to the following conditions:

(a) the approved tourism development is a tourism development that provides first class hotel accommodation in Samoa, as approved by Cabinet acting on the advice of the Minister of Finance; and

(b) the credit or balance of the credit is claimed against income tax payable in the year or years approved by the Commissioner until the credit is exhausted; and

(c) the investment is held for a period of at least five (5) years in a form of investment approved in writing by the Minister of Finance.

(3) If the investment is not held under subsection (2)(c), the Commissioner must:

(a) cancel the credit; and

(b) assess or reassess the person’s income tax

liability pursuant to this Act, and the person concerned is liable for income tax as if thecredit were not allowed under subsection (1).

(4) Regulations may be made under section 106 to give effect to or for the purposes of this section.

(5) This section expires on 30 June 2018, without affecting the validity of anything done or suffered under this section or any right, interest, or title already acquired, accrued, or established, or any remedy or proceeding for any credit allowed under this section.”.

Starting on 1 December 2017, the government will be collecting its full share of tax revenues from certain companies who are part of the government’s tax credit scheme. 

This was confirmed by Minister of Revenue, Tialavea Tionisio Hunt. 

“The government is losing out a lot of money from this scheme and so me and Minister of Revenue Sili Epa Tuioti have put a stop to this,” he said. 

“The government needs those revenues for numerous developments."

“The hoteliers are not happy about the move, but we know this is the right path and we will take it.”

He then referred the questions to the Sili. 

Emails and phone calls to the Minister of Finance earlier this week have not been answered. 

During the opening of the current Financial Year 2017-2018, Minister of Finance Sili announced the review of current taxation arrangements, such as examination of current taxation procedures and recommend improvements it considers will support the purpose and objectives of the review including the use of tax holidays or other concessions and the use of tax credits such as timeshare scheme. 

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