Taxes in Samoa

Samoa has a central national tax administration rather than separate tax authorities for the country's administrative regions or municipalities. The main institutions are the Ministry of Revenue, Inland Revenue Services and the Ministry of Customs. The Commissioner of Inland Revenue administers income tax, PAYE, VAGST and tax procedure, while the Comptroller of Customs administers customs duties and border taxes. The Tax Tribunal and Supreme Court handle defined review and appeal stages. A business licence is a separate operating requirement and does not replace tax registration. The main tax laws are the Income Tax Act 2012, Value Added Goods and Services Tax Act 2015, Tax Administration Act 2012, Customs Tariff Act 1975 and applicable excise tax legislation. The tax year follows the calendar year and ends on 31 December. Samoa uses the tala, abbreviated SAT. A resident individual is generally taxed on income from sources inside and outside Samoa. A non-resident individual is generally taxed on Samoa-source income. A resident company includes a company incorporated, formed or registered in Samoa, or one whose central management and control is in Samoa; it is generally taxed on worldwide taxable income. A non-resident company is generally taxed on Samoa-source taxable income. The exact source and residence analysis can affect registration, filing, withholding and treaty treatment. Individual income tax is progressive. Annual taxable income up to SAT 15,000 is taxed at nil, income from SAT 15,001 to SAT 25,000 at 20%, and income above SAT 25,000 at 27%. Employers normally deduct PAYE, meaning pay-as-you-earn withholding, when they pay wages. PAYE returns and payments are generally due on the 15th day of each month, and the annual P6 reconciliation is generally due on 15 February. A person without taxable income is not automatically free from every filing requirement; the applicable form and the Commissioner's instructions determine whether a return or other filing is required. A resident company generally pays 27% on global taxable income, while a non-resident company generally pays 27% on Samoa-source taxable income. A sole trader or individual business uses the progressive individual rates. A partnership is generally assessed through allocation of partnership income under the Income Tax Act. Company tax is separate from the tax position of members or shareholders. Dividends paid by a resident company are not generally taxed again for the recipient under the official IS01 treatment. Business income can include gross proceeds, fees, rent, interest, royalties and dividends where the Income Tax Act brings them into the tax base. Individual proprietors, entities and other legal arrangements carrying on business in Samoa generally require income-tax registration and an annual declaration. Withholding tax depends on the payer, recipient and type of payment. A government entity, ministry, state-owned enterprise or public authority generally withholds 10% from payments to a resident person for personal or professional services, using P5. A private business generally does not apply this resident withholding tax merely because it pays another private business. Payments to a non-resident for interest, royalties, insurance premiums, management fees, personal or professional services, natural-resource amounts and similar specified categories can attract 15% withholding tax. Payments to a non-resident contractor can also attract 15% on progress payments. This withholding is generally final tax for the relevant non-resident amount, although the facts and any applicable treaty can change the result. Samoa's agreement with New Zealand requires particular attention where it applies. VAGST means value-added goods and services tax. It generally applies at 15% to most taxable goods and services, taxable imports and certain imported services. A business normally must register when its taxable supplies exceeded SAT 130,000 in the previous 12 months or when it reasonably expects them to exceed that amount. The application is generally due within 15 working days after the registration obligation arises. Taxable periods are generally two months, in category A or B, and the return and payment are generally due on the 21st day of the month following the period unless an official notice sets another date. Exports and certain going-concern transfers can be zero-rated. Financial services, bus and taxi passenger transport, inter-island ship passenger transport and qualifying aid supplies are examples of exempt categories. A registered business must issue tax invoices, keep records and calculate available input credits under the VAGST rules. Businesses with annual turnover of about SAT 200,000 are within the target area for TIMS, the tax information management system. Imports can create several liabilities at once. Customs duty is commonly ad valorem at 5%, 8% or 20%, but the applicable rate depends on the goods classification under HS2017 and the Customs Tariff Manual. Imports can also attract VAGST and, for specified goods, import excise. Excise commonly applies to tobacco, alcohol, petroleum, sugary or carbonated products, flour, vehicles and certain meat. A passenger allowance generally applies only to a person aged 21 or older and allows up to 2.25 litres of alcohol, 200 cigarettes or 250 grams of tobacco, and other dutiable goods up to SAT 500, provided the goods are for personal use and not resale. Customs can detain goods when duty or tax remains unpaid. The Commissioner can issue or require a tax identification number, or TIN. Taxpayers can file and pay online through Samoa eTax, also called SET, or use forms and Ministry offices where available. Annual income-tax returns are generally due on 31 March. Provisional tax payments are generally due on 31 March, 31 July and 31 October. Written extensions may be granted for reasonable cause for up to 12 months after the original return deadline, but an extension normally does not postpone the payment due date. When a deadline falls on a Saturday, Sunday or public holiday, the next business day generally applies. Late filing after one month can result in a SAT 300 penalty for a company and SAT 100 for another taxpayer. A late document can attract SAT 10 per day or period as prescribed, subject to a maximum of SAT 500. Late payment after one month can attract a 10% penalty, and interest runs from the due date at the prescribed rate, reported as 8.7% at the research date. Failure to keep records can result in a penalty of up to 75% of the tax concerned. Non-filing can be an offence punishable by up to 10 penalty units or one year's imprisonment. A refund is first applied against other tax liabilities; a remaining overpayment can generally be claimed within four years if the tax is undisputed. The Commissioner may grant hardship relief, while relief above SAT 10,000 requires Minister approval. The Commissioner may access or search premises, property, paper records, electronic records and data storage without notice where the law permits. The administration can issue summonses, make default or amended assessments, recover tax through third parties and order closure in applicable cases. An objection to an assessment or notice generally must be lodged with the Commissioner within one month, using the approved form and detailed grounds. A taxpayer can generally seek Tax Tribunal review within one month after the objection decision and appeal to the Supreme Court within two months on a question of law. An assessment normally remains payable while an objection or appeal is pending. A recovery stay can cover at most 50% of disputed tax, and the undisputed amount generally must be paid first. International rules allocate taxing rights between Samoa-source income and worldwide income of residents. Samoa lists an agreement with New Zealand, 17 tax information exchange agreements and participation in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, effective for Samoa from 1 December 2016. Exchange of information on request has operated since 2009. Under automatic exchange of financial-account information, reporting financial institutions apply due diligence and collect self-certifications from foreign tax residents. Samoa's CRS reporting cycle uses portal testing and relationship work from 1 March to 30 April, reporting from 1 May to 30 June and closure from 1 July; CRS has applied in Samoa since 31 December 2016. Samoa has been an associate of the BEPS Inclusive Framework since 4 February 2021, with official focus on Actions 5, 6, 13 and 14. Transfer-pricing and arm's-length audit capability is developing, so treaty and related-party pricing treatment requires case-specific review. Foreign residence alone does not create a general exemption from Samoan tax.