Samoa Property Investment GuideHospitality Edition | 2014

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Property Tenure/OwnershipThere are three types of property tenure in Samoa:

• Freehold land: Freehold land is privately owned and constitutes approximately 12% of land area in Samoa. It can be transferred, leased, mortgaged or otherwise dealt with.

• Public land: Public land is owned by the Government of Samoa and constitutes approximately 7% of land in Samoa by area. Public land can be leased and, in certain circumstances, transferred.

• Customary land: Customary land is owned communally in accordance with traditional custom and usage. Approximately 81% of land area in Samoa is customary land. Customary land may be leased but may not be otherwise sold or transferred.

Freehold land operates under a Torrens title system. This is a form of government-guaranteed title, where a certificate of title contains details of the owner and various dealings with that land (e.g. leases, mortgages, easements, caveats etc).

Leases of public land and customary land are administered by the Government of Samoa’s Ministry of Natural Resources and Environment and are based on standard terms.

Major Property LegislationKey property legislation in Samoa includes:

• Alienation of Customary Land Act 1965• Alienation of Freehold Land Act 1972• Lands, Surveys and Environment Act 1989• Land and Titles Act 1981• Land Titles Registration Act 2008• Property Law Act 1952• Stamp Duty Ordinance 1932• Unit Titles Act 2009 (yet to commence operation)A Torrens title system was introduced to Samoa’s freehold land system under the Land Titles Registration Act 2008. This replaced the old deeds registration system that was formerly in place. The registration system under this legislation extends to public land and customary land.

Dealings in public land are regulated by the Lands, Surveys and Environment Act 1989 and administered by the Land Board. Government land leases are limited by law to 20 years duration with the option of one or more renewal periods of 20 years each. Rent is payable six monthly in advance and is set at 5% per annum of the value of the land, as determined by the Land Board. Rent is reviewed at least every five years. The lease and sale of government land generally requires a public tender process.

Customary land is owned collectively, but is notionally held by the ‘matai’ (traditional chief and head of the family) who has ‘pule’ or authority over the land. Customary land may be leased from its customary owners but it may not be otherwise sold or transferred to private owners. The process of leasing customary land is regulated by the Alienation of Customary Land Act 1965. The government acts as a trustee on behalf of customary land owners for the negotiation of land leases and collection of rent. Customary land leases are for 20 or 30 years duration, depending on the intended land use, and may be renewed for a further period. Standard lease terms provide for rent to be paid annually in advance with rent reviews conducted every two to five years.

The Unit Titles Act 2009 facilitates unit or strata title. This enables an owner of a piece of land or part of a building to share ownership in common property with other owners of a strata scheme. This legislation has yet to commence operation.

Operational Requirements for Foreign CorporationsSamoan law recognizes the various business structures utilized under the common law:

• sole traders;• partnerships; • limited liability companies; • joint ventures; and • trusts (including unit trusts). These structures are regulated by legislation including the:

• Companies Act 2001; • Partnership Act 1975; • Trustee Act 1975; and • Unit Trusts Act 2008. Samoa’s Companies Act 2001 contains a modern regulatory regime based on New Zealand company law. It allows the incorporation of a sole person company (i.e. one person being both shareholder and director) and directors need not be residents in Samoa.

A Samoa incorporated private company is a separate legal entity and a corporation under Samoan law. It must file an annual return with the Registrar of Companies specifying details of directors, shareholders, registered office etc. There is no requirement for private companies to file annual financial reports with the companies registry nor are there any minimum capital requirements.

A company incorporated in another jurisdiction but which is doing business in Samoa may reregister in Samoa as an overseas company. Reregistered overseas companies must also file annual

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returns but are not required to file copies of financial reports with the companies registry.

Samoa’s new Personal Property Securities Act 2013 has yet to come into effect but will introduce an electronic registration scheme for security interests in personal property, similar to those in Australia and New Zealand.

Businesses operating in Samoa also require a business license which is renewed annually.

There are some restrictions on the employment of foreign nationals in Samoa. All foreigners working in Samoa must obtain a valid work permit. When considering work permit applications, the government considers the expertise required for the position, and whether the position can be readily filled locally.

Restrictions on Foreign Property OwnershipTransfers of freehold land to foreigners, foreign-owned companies and non-resident Samoan citizens are subject to strict controls. The Alienation of Freehold Land Act 1972 puts in place a regime that requires the Head of State’s consent to any transfers or leasing of freehold land to:

• companies where more than 25% of the shares are owned by foreigners or nonresident Samoan citizens; and

• individuals who are not Samoan citizens, or who are nonresident Samoan citizens.

If land is transferred to such buyers without the Head of State’s consent, the transfer is deemed to be unlawful and ineffective. Sale of public land to foreign interests is similarly limited. Customary land cannot be transferred.

Foreign Investment Regime and IncentivesSamoa’s foreign investment regime is contained in the Foreign Investment Act 2000. All businesses with any foreign ownership require foreign investment approval. The approval process is administered by the Industry Development and Investment Promotion Division of the Ministry of Commerce Industry and Labour (‘MCIL’) – see www.mcil.gov.ws

Samoa’s foreign investment regime is largely permissive and aims to encourage foreign investors to establish business in Samoa. However, there are some restrictions on activities that can be conducted by foreign-owned or part-owned businesses. The ‘reserved list’ of activities that can only be conducted by Samoan citizens includes:

• retail; • transport services; and • sawmilling.

Activities on the ‘restricted list’, including certain fishing as well as manufacturing and services, require a local partner.

The government also offers tax incentives to exporters and tourism developers through a concession scheme. Income tax exemptions and tax credits are also available for tourism developments.

Exchange Control RegulationsThe Samoan tala is a controlled currency and the Central Bank of Samoa monitors and controls all foreign exchange movements. The Central Bank approval is required for remittance out of the country in amounts greater than set limits, including the repatriation of capital and dividend payments. The power to approve remittance of smaller amounts has been delegated to commercial banks. The Central Bank also regulates the establishment of foreign currency accounts and offshore borrowings. Bona fide remittances are routinely permitted; however, larger amounts may have to be remitted in tranches. Further information is available from the Central Bank of Samoa – www.cbs.gov.ws.

Taxes on Acquisition and Transfer of Real EstateStamp duty is charged on a range of written instruments, including transfers and leases of land and security documents. Stamp duty is mostly nominal.

For land transfers, stamp duty is applied on a sliding scale:

Property Value Stamp DutyLess than WST 50,000 (USD 21, 940)

1% of the property value

WST 50,000– WST 99,999 (USD 21,940 – 43,879)

WST 500 + 2% of the excess above WST 50,000

WST 100,000– WST 199,999 (USD 43,880 – 87,760)

WST 1,500 + 3% of the excess above WST 100,000

WST 200,000 or more (USD 87,760)

WST 4,500 + 4% of the excess above

Stamp duty on leases is levied at a rate of WST 0.40 (USD 0.17) for each WST 100 (USD 43.88) of the annual rent.

Other Tax IssuesIncome taxIncome tax is levied under the Income Tax Act 2012 on the taxable income for the previous calendar year. This new simplified tax code came into effect on 1 January 2013. The company tax rate is 27%.

Non-resident companies (i.e. a reregistered overseas company) are charged 27% tax on their taxable income derived from sources in Samoa to the extent attributable to business carried on through a permanent establishment in Samoa.

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The top marginal tax rate for individuals is also 27%. This applies to assessable income over WST 20,000 (USD 8,776) per annum.

Foreign-controlled companies are subject to thin capitalization requirements, so that if the company has a debt-to-equity ratio of more than 3:1, they cannot claim a deduction for interest on debts that exceed that ratio. Tax laws also include transfer pricing rules.

DividendsDividends paid by resident companies are tax exempt income in Samoa.

Withholding taxWithholding tax of 15% is payable on interest earned on bank deposits etc.

Capital gains taxCapital gains tax is levied at 27% on profits arising from the disposal of capital assets sold within three years of the date of acquisition.

DepreciationDepreciation is available either according to a straight line depreciation method or a declining balance method (accelerated depreciation). Depreciation is also permitted on intangible assets, such as intellectual property, customer lists, marketing intangibles and contractual rights.

Value Added Goods and Services Tax (VAGST)Samoa’s consumption tax, or ‘VAGST’, is levied on the supply of most goods and services at a rate of 15%. There are certain exempt supplies (e.g. local food, financial services, transport fares, electricity) and zero-rated supplies (e.g. exports). VAGST is also payable on imports at a rate of 15%.

Businesses register for VAGST as part of the business license process. VAGST returns must be filed every two months.

TariffsCustom duties for all imported goods are currently set at four levels or clusters: 0%, 5%, 8% and 20%. This duty scheme, which was reformed as part of Samoa’s WTO accession, replaced the previous import tariffs which ranged from 0% to 60%. Excise duty is also imposed on alcohol, soft drinks, tobacco products and certain motor vehicles.

Pay As You Earn (‘PAYE’) Employers must deduct ‘PAYE’ tax deductions from employee’s salary payments. ‘PAYE’ installments are paid monthly to the Ministry for Revenue.

Tax Treaties: Avoidance of Double TaxationSamoa does not have any double taxation treaties in place. However, a Double Taxation Agreement between Samoa and New Zealand is currently being developed.

Samoa has signed Tax Information Exchange Agreements with Australia, New Zealand and a number of European countries. These agreements generally provide for exchange of information, on request, in both criminal and civil tax matters. Implementation of these agreements is governed by the Tax Information Exchange Act 2012.

The information in this guide is current as at 1 August 2013.

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Clarke Ey LawyersLevel 1, Lotemau CentreMatafele, Apia, SamoaPO Box 6335 , Apia, Samoatel +685 28012 fax +685 28014 www.clarkelawyers.net

Jones Lang LaSalleLevel 25, 420 George Street, Sydney NSW 2000 tel +61 2 9220 8500

www.joneslanglasalle.com.au

© 2014 Jones Lang LaSalle. All rights reserved.All information contained herein is intended as guide only and does not constitute advice. It does not constitute any offer or part of any contract for sale, lease or otherwise. All details are approximate and have not been independently verified. Users should make their own enquiries to verify and satisfy themselves of all aspects of the information (including without limitation, any income, rentals, dimensions, areas, zoning and permits). While the information has been prepared in good faith and with due care, no representations or warranties are made (express or implied) as to the accuracy, currency, completeness, suitability or otherwise of such information. Jones Lang LaSalle, its officers, employees, subcontractors, agents and clients shall not be liable to any person for any loss, liability, damage or expense arising directly or indirectly from or connected in any way with any use or reliance on such information. The whole or any part of this document must not be reproduced without written consent from Jones Lang LaSalle.

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