AMERICAN SAMOA GOVERNOR TAUESE TURNS DOWN THREE TAX EXEMPTION REQUESTS

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By Fili Sagapolutele

PAGO PAGO, American Samoa (April 12, 2002 - Samoa News)---Governor Tauese Sunia has denied tax exemption requests from three local companies that the Tax Exemption Board reviewed earlier this year.

The Board had reviewed the requests for tax exemption from American Samoa Telecom LLC/American Samoa License, Inc., (also known as Blue Sky Communications), KFC American Samoa and Ottoville Investments One (OIO) Inc.

Samoa News was unable to confirm at press time what the Tax Exemption Board had recommended to the Governor on any of the requests.

However, it appears from an April 9th letter from Governor Tauese to the Tax Board Chairman, Aitofele Sunia, that the Board recommended passage of the three applications.

"While I appreciate the input from the Board, I cannot concur in the recommendations and deny all three requests," the Governor informed the chairman.

Tauese said that with the recent changes in the excise tax law, which requires the American Samoa TeleCommunications Authority (ASTCA) to pay import duties and the recent execution of leases between ASTCA and ASG for real estate use by ASTCA "it appears Blue Sky and ASTCA are on a more level playing field."

When asked for comments yesterday, Blue Sky's Larry Sanitoa said it's difficult for their company to reply until they review the full response from the Administration.

A new law enacted recently forces the government, its independent agencies and its contractors to pay excise taxes on all imported goods that arrive on island.

ASTCA and other semi-autonomous agencies of the government are now paying ASG land lease fees as officially announced by Governor Tauese earlier this year.

ASTCA's executive director Aleki Sene told a Senate panel last month that it is now paying a little over $86,000 a year on government land leases and about $170,000-$200,000 in excise taxes depending on the purchases ASTCA imports into the territory.

According to Tauese, ASTCA "continues to service certain ASG obligations." ASTCA pays about $1.1 million a year for two outstanding ASG debts acquired while ASTCA was still the Office of Communications, an ASG department.

Tauese said Blue Sky "did enjoy an exemption when it first became established in the Territory."

"Regarding the applications for Ottoville Investments and KFC, it does not appear these exemptions are absolutely necessary to attract these businesses or to assist in their success," the Governor added.

OIO president Avamua Dave Haleck told the Samoa News yesterday that the company was "basically asking ASG to relax the excise tax on goods it brings into the territory, such as materials, supplies and equipment, but nothing to do with any corporate taxes.

"It's too bad the request was rejected," Avamua said when asked for comments.

"This is a major investment for the community and we thought the government should do their part in assisting us.

"It's an investment made by our family and to benefit the entire community in terms of employment, opening up the island for future tourism and business travelers just to name a few benefits," he pointed out.

For the hotel itself, Avamua said construction is "coming along very well with December set as the date for its grand opening."

The Governor's decision on these three requests coincides with a Jan. 19, 2001 notice he issued to the Tax Exemption Board saying that he will not approve any more tax exemptions and to please inform any applicants, whether for new or amended certificates, of his position.

KFC American Samoa is the local franchise of Kentucky Fried Chicken being spearheaded by local businessman Vince Haleck.

Ottoville One, owned by the Haleck family, is presently constructing the new Tradewinds West Hotel in Ottoville, Tafuna.

Tax exemptions may be granted by the Governor to help foster economic development and investments in the territory. The Tax Exemption Board makes recommendations to the Chief Executive, who makes the final decision. There is no Fono review of the Governor's decision.

A bill now before the Senate, would overhaul current tax exemption laws, which in general would restrict the Governor's authority to grant tax-exemption certificates.

Several large and small companies operating in the territory have tax exemptions, including the two canneries, Impress Samoa (can manufacturing), American Samoa 2000 (the McDonalds franchise operator) and American Samoa Cablevision.

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