Am. Samoa Works To Reduce Corporate Tax Structure

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Chamber notes rate is highest in all states, territories

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, May 31, 2015) – ASG Tax Office manager Richard Jimmerson has confirmed that the government is working on legislation to decrease American Samoa’s corporate tax rate, which the Chamber of Commerce have complained for years is too high and the highest in the states and territories.

Jimmerson made the revelation during a recent Chamber general membership meeting where he was the guest speaker talking about various tax issues raised by the local business association.

Changes to the corporate tax rate is one of the issues on the meeting agenda and the Chamber recommends reducing the 44% corporate tax to 35% with a target of 25% over a 4-5 year period.

"At 44%, we are one of the highest in the world," Jimmerson told Chamber members, adding that the disadvantage of such a high corporate tax rate is when the Department of Commerce goes out to try and bring to the territory companies to do business or invest and these possible investors find such a high tax rate making if difficult to attract them to American Samoa. The Chamber has been making this same argument for years.

Right now, if the 44% is reduced to 35%, "I will loose about $600,000" a year in corporate tax revenue, he said, and noted that there are only a few companies on island that pay the current rate.

Jimmerson told business representatives that the government is working on legislation to be sent to the Fono that will reduce the current 44% corporate tax, but he didn’t elaborate on how low a reduction ASG is planning.

Reducing the corporate tax, as well as removing the 30% withholding and 30% investment taxes for non-U.S. companies, are among some of the issues that the Chamber plans to address through a planned Tax Reform Committee, which will be made up of volunteers from the private sector.

The ASG task force for the Economic Development Implementation Plan (EDIP), in its report released early this year also calls for changes to the corporate tax, which it says is the highest in the Pacific and probably the U.S., countering efforts to encourage investments in the Territory.

According to the EDIP, the current tax system and rates are based on the federal 2000 Internal Revenue Service tax code and rates. It calls for tax reforms in the territory by reviewing the current tax system and amending it appropriately to encourage business and economic development, promulgate a fair system for all taxpayers, and increase the efficiency in the audit and collection processes.

Additionally, EDIP is exploring a tax amnesty program to provide incentives for businesses and individual taxpayers to pay off their tax liabilities.

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