Minister of Revenue, Tialavea Tionisio Hunt, has warned Samoan citizens fronting up to apply for licenses for businesses funded by foreigners that their actions are illegal.
Samoa has in recent years seen a proliferation of foreign-owned businesses in Apia, triggering concerns that foreigners are using locals as fronts in order to meet the government’s strict business registration regulations.
But the Minister said the actions of citizens engaging in this practice is illegal and they will be investigated.
“This is illegal and we have sent out Internal Revenue Officers to investigate these claims. The problem is our own people. They submit the application as if they are the ones who will run the business, yet we find out there are Chinese people in the backrooms monitoring the cameras and keeping tabs on the workers,” he said in an interview with Samoa Observer.
“We had to close down one store last year when our office acquired solid evidence to prove the Chinese is the one who is funding the business, yet the business license is under someone else.”
Tialavea confirmed that they are investigating whether there are other businesses involved in such practices and warned that the Revenue Office will not hesitate to do what is right.
“This is illegal and if caught they will be dealt with in accordance to the law. Although this is common knowledge with the many Chinese shops, but the fact remains is that we cannot prove it unless there is concrete evidence, only then we can act,” he said.
But capacity challenges currently being experienced at the Revenue Office is making it difficult for on-the-spot checks on businesses, which Tialavea admitted is an ongoing issue, but they are managing with the resources they have.
The submission of false financial statements by businesses – in order to avoid paying value-added goods and services tax (V.A.G.S.T.) – is another challenge facing the Revenue Office.
He explained this is a tax on most goods and services supplied in Samoa by a registered business and is also charged on most imported goods and certain services. The V.A.G.S.T. of 15 per cent is added to the price of taxable goods and services.
As an example of tax evasion by businesses, he said: “If you have an annual turnover of $130,000 or more from your taxable activity or you expect your turnover to be $130,000 or more in the next 12 months, you must register. Under the threshold for the V.A.G.S.T. $130,000 per annum, yet some stores submit their financial statements just under the threshold – yet spot checks see the stores have a stock of more than $200,000.”
Tialavea said even his own visits to shops show them having stock whose value exceed $200,000 but are filing their tax returns under the $130,000 threshold.
“And we are seeing of a lot of these lately and it is becoming a trend that should be eliminated. I sometimes go shopping and then inquire about a certain shop to find out they are filing under the threshold of $130,000; yet the stock in the store is far more than the threshold.”
He said it is an area that they are working hard to address and the deployment of internal revenue officers out in the field will enable them to investigate.