A bill which seeks to amend the Stamp Duty Ordinance has been passed by Parliament.
The amendments will allow the Ministry of Revenue and the Ministry of Natural Resources and Environment to require proof of payment of capital gains tax before stamp duty is issued.
Stamp Duty is charged for written notices on transfers and leases of land and security documents.
The Bill was introduced as an urgent matter and was immediately passed.
In Parliament last week, the Minister of Finance, Sili Epa Tuioti, explained objectives of the bill.
He told Parliament the bill will allow the Ministry for Revenue and the Ministry of Natural Resources and Environment to require proof of payment of capital gains tax before stamp duty may be issued.
There were concerns raised by Member for Alataua West, Ali’imalemanu Alofa Tuuau. She said the Bill should have been introduced with all of its complementary Bills.
“How will the law operate in a case where the owner of a tax-free asset proceeds to sell the vehicle and is later required to pay a stamp duty charge?” she asked.
Sulumanaia Fetaiai Tuivasa supported the measure noting it will bring forth capital gains as tax will be paid where applicable.
However he pointed out there are possible delays for land buyers who may not be able to register their land due to the seller failing to pay capital gains tax.
He suggested that the time frame be increased to 10 years if one has owned land for more than 10 years he or she is exempt from paying capital gains tax.
Lealailepule Rimoni Aiafi also supported the measure but was concerned about the price of land continuing to fluctuate.
He suggested for the Ministry to look into the existing processes for the transfer and disposal of land “where many people gift land to others in order to avoid paying capital gains tax.”
Former Cabinet Minister Faumuina Tiatia Liuga inquired about capital gains tax for land that are gifted to family and children.
But Prime Minister Tuilaepa Sa’ilele Malielegaoi said people would try to avoid paying capital tax gains by gifting their land to their children.
He said the government’s major concern is to record the land sale transaction because landowners would eventually sell their land.
He said the bill would secure a mechanism for the government to monitor all land sales.
He spoke about the “the difference between tax avoidance and tax evasion” and noted that in the government’s experience, there is not much difficulty with tax avoidance cases as such land gifting.
Member of Parliament, Lauofo Fonotoe Pierre, expressed his concern regarding cases where a land sale has taken place but the seller does not pay the capital gains tax.
This causes a delay because the buyer is not able to register the land.