Company defends use of tax breaks for resort expansion
The Managing Director for Lamana Development Limited, Sir Kostas George Constantinou, has defended his company's use of tax credit scheme to build extra apartments at the Taumeasina Island Resort.
In emailed comments, Sir Kostas said Taumeasina Island Resort has “acted legally in all respects in this transaction”.
The Tax Credit Scheme was enforced in 2003 under the Income Tax Amendment Act, which exempted hoteliers from taxes if they invested in other hotel developments.
But the scheme was abolished by the Government last year.
“I confirm that Taumeasina Island Resort is developing further apartments. I can advise Taumeasina has acted legally in all respects in this transaction,” Sir Kostas said.
The Minister for Finance, Sili Epa Tuioti, said arrangements for the expansion were already in train with the investors under the scheme and Government cannot put a stop to that.
“If we didn’t introduce the law to abolish the scheme, then it would have dragged on for several years. I was only keen to make sure it doesn’t drag on,” Sili said.
The Minister for Customs and Revenue, Tialavea Tionisio Hunt, said the request to invest and expand Taumeasina Island Resort was presented before the law was abolished.
“I held the tax credit for investors however this was approved beforehand and it’s for five years (2023). Go and talk to Avalisa [Ministry’s C.E.O]."
“These investors have already submitted financial statements to assure and it's not just Taumeasina, there is also the Return to Paradise Resort and their tax credit is much higher than Taumeasina.”
E-mails sent to Return to Paradise Resort was not answered as of press time last night.
Sir Kostas, who is Chairman of the Bank South Pacific, said that role had no intersection with the new development.
"B.S.P. which is a listed enterprise which is involved in banking. B.S.P. is not an owner or builder of the new development," he said.
“I advise B.S.P. has a Board and high level executive team who are led by a C.E.O. I could not individually make an investment decision for B.S.P. I do have authority at Lamana Development and advise Lamana is not directly involved as a contractor.”
A recent article published in the Samoa Observer said some $118 million tala in tax credits are owed to the Government since its tourism tax credit scheme was brought into force in 2003, Tialavea said.
Tialavea said hoteliers who invested before the tax scheme was abolished were given five years to utilise their investments.
“Some [hoteliers] already invested before we closed [the tax credit scheme] last year in June, so I don’t know what the amount they have to use in the next five years and they have to use that until 2023.
“After the five years, and if [hoteliers] don’t, they will forfeit the investment,” Tialavea said.
Taumeasina Island Resort is owned by three P.N.G. joint venture partners - Lamana Group, Petroleum Resources Gobe and the Mineral Resources Development Corporation (M.R.D.C.).
Sir Kostas Constantinou is the Managing Director of Lamana Development Limited (which led the construction of Taumeasina Island Resort) and is a director of the Constantinou Group of Companies which includes Lamana Development Ltd.
Lamana Group (which has tourism assets in Papua New Guinea, Solomon Islands and Fiji) currently manages the Taumeasina Island Resort on behalf of the three joint partners.