|July 19, 2001
FOR IMMEDIATE RELEASE
|WASHINGTON, D.C.—FALEOMAVAEGA COSPONSORS LEGISLATION TO PROVIDE FEDERAL TAX PREFERENCE FOR BUSINESSES IN AMERICAN SAMOA|
| Congressman Faleomavaega announced
today that he has cosponsored legislation which will allow U.S.-controlled
businesses operating in a U.S. territory to return profits to the United
States with a tax preference. Because this tax preference would not
be available to foreign-controlled businesses, it will provide an incentive
for American-owed businesses to conduct their operations in the U.S. territories,
including American Samoa.
“Many of us from the territories have been concerned for some time that the phase out of the Possessions Tax Credit beginning in 1996 is working to the disadvantage of U.S. territories. While the credit is being phased out over 10 years in the other territories, we were able to preserve the full benefit of the tax credit in American Samoa until 2005, but only for existing businesses,” said Faleomavaega.
“This new tax preference will be made available to existing businesses as well as new businesses,” the Congressman continued. “If enacted into law, this will be one more incentive we can use to recruit businesses to our shores. This change in federal tax law will not change local tax law, and ASG can continue to tax businesses operating in American Samoa as it deems appropriate.”
“I want to thank Congressman Phil Crane and Congressman Charlie Rangel for their willingness to include American Samoa in this legislation which will be of benefit to all the territories. As senior members of the House Committee on Ways and Means, they are in a position to move this bill through the House and on to the Senate.”
Under current law, U.S. controlled businesses incorporated outside of the U.S. and operating overseas pay no federal tax on their profits until they bring them into the United States. This provides an incentive for the U.S.-controlled corporations to keep their profits outside of the United States. The new legislation will amend Section 956 of the internal revenue code to allow businesses incorporated and conducting business in a U.S. territory to bring the profits of the business into the United States and receive a 90% exclusion of corporate income tax from the United States. The same corporation conducting business in a foreign country would not have this benefit. Foreign businesses conducting operations in the U.S. territories would not have this benefit. “This change in the law would be a win for the territories and a win for the United States,” concluded Faleomavaega.
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