MAJOR DEVELOPMENTS
Effective July 1, 1995, the individual income tax rate was reduced see item 9;Effective January 1, 1994, rebates based on the number of dependents were abolished.
INCOME TAXES ON CORPORATIONS
1. Rates
Companies are taxable annually on their worldwide taxable income, including the balancing charge arising from the sale of business assets and intercorporate dividends. No distinction is made between private or public companies for income tax purposes.
Taxpayer Tax Base Rate
Companies:
Resident Worldwide taxable income 35.0%
Nonresident Western Samoan-source taxable income 35.0
Insurance companies:
Resident Non-Western Samoan-source
reinsurance income 2.5
Life insurance fund investment income 10.0
Nonresident Life insurance premiums income 7.5
General insurance premiums income 15.0
Reinsurance premiums income 7.5
Shipping companies Gross income 5.0
Nonresident film rental companies Gross income 15.0
No special provisions exist for extractive industries.
Deductions from taxable income are allowed for all reasonable expenses incurred in gaining or producing income and for accumulated losses.
Certain income is exempted from taxation by investment incentives. Also tax exempt is income derived by the producer of primary production from the sale and disposal of primary production. This income has been exempted since the tax year beginning January 1, 1975. Primary production includes farming, handicrafts, and fishing. Clergy income from donations have been exempt since January 1, 1988. Other exempt income includes National Provident Fund income and income derived from nonresident government securities, sports associations, charitable organizations, and others.
7. Payment of Taxes
Income tax is assessed on the preceding year's income. Companies pay an estimated provision tax based on that assessment.
INCOME TAXES ON INDIVIDUALS
9. Rates
A wage tax applies to the worldwide income of individuals resident in Western Samoa. Benefits-in-kind are included in income. Effective July 1, 1995, the tax rates for individuals are:
Annual Taxable Income
Over Not Over Tax Rate
WS$ 0 WS$ 6,000 Nil
6,000 12,000 10%
12,000 18,000 20
18,000 35
Effective January 1, 1994, rebates based on number of dependents are not available.
Taxable income is gross income less deductions permitted by law. Deductions include reasonable business expenditures incurred to earn business income, but business losses are not deductible from wage income. Income derived from primary production is exempt from tax. The tax on wages and salaries is withheld at source under the pay-as-you-earn (PAYE) scheme. Taxes are paid in installments during the year in which the income is earned. Except under special circumstances, PAYE tax is the final tax, with no refunds.
Dividend and other payments made by companies are subject to withholding tax at source, which is a final tax (see item 17). Dividends received from enterprises granted an income tax holiday are exempt from tax.
14. Other Matters
Partnerships. Partnerships are not subject to tax as a separate entity; the tax assessments are issued on each of the partners.
Trustees. Trustees are taxable at the flat rate of 50%.
INCOME TAXES ON NONRESIDENTS
15. Liability to Tax
Nonresident companies having assets or business in Western Sam
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