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The Tonga government Thursday rushed a Bill through parliament to attract investment in Tonga, as government prepares to host the 2019 Pacific Games.
Under the Act large tourism investors may apply for tax exemption on millions of pa'anga of their income - if they can win the approval of the Minister of Revenue and Customs and consent of Cabinet, while sponsors who make donations similarly may apply for large income tax exemptions.
Parliament passed the Pacific Games 2019 Taxation Incentives Bill 2017 with votes of 13-3.
The House had to work well into their lunch break at noon to pass the Bill, which was rushed through the House.
The Bill was tabled into the House by Tevita Lavemaau, the Minister for Revenue Collection and Customs and there was a sense of urgency for the House to pass the Bill before the end of the week.
The nine page Act will clearly benefit big investors on the scale of the Tanoa operation. Under the new act in return for a large tourism development investment of $3 million (US$903,000) or more investors may apply for income tax deductions on up to $6 million (US$2.7 million) of their income - if they can win the approval of the Minister of Revenue and Customs.
The Minister may also grant a special tax incentive to a “person who is eligible” if they make a donation of more than $50,000 (US$22,587) to a sporting body they can declare twice the amount of the donation as a deduction for income tax purposes.
The Minister believed the incentive would attract investment and donations before the Games.
Tevita Lavemaau stressed to the House the importance for the Bill to be passed. “If we don’t pass this Bill, the sports will be a sad story.”
Under this Special Tax Incentives Bill the Minister for Revenue Collection and Customs may grant to an eligible person:
*200% of the donation of $50,000 or more made to a national sports federation, to be allowed as a deduction for income tax purposes.
*200% of the value of an investment made to a tourism entity, approved by the Minister, and made during a time period prescribed by the Minister, to be allowed as a deduction for income tax purposes, where such investment is equivalent to $3,000,000 (US$1,355,750) or more.
*As an alternative the Minister may grant the official sponsor exemption from customs duties and taxes applicable to goods imported and belonging to the official sponsor with a total customs value equal to 200% of the value of its sponsorship. - or split it between a tax incentive and duties exemption.
For an official sponsor of the Pacific Games, the Minister may also allow a deduction of income tax purposes up to 200 percent of the value of its sponsorship.
An insistence by the Tongatapu People Representative No. 4 Mateni Tapueluelu for more time for members to have a better understanding of the Bill was to no avail, as the Chairman of the Whole House Committee Light of Day Taka called for votes, and it was carried, 12-4. Against were Mateni Tapueluelu, Vili Hingano, Lord Tu’I’afitu and Lord Tu’ivakano.
When the Speaker, Lord Tu’ivakano called for the final voting on the Pacific Games 2019 Taxation Incentive Bill 2017, it was carried 13-3; against were Mateni Tapueluelu, Vili Hingano and Lord Tu’i’afitu.
The Act will be repealed after the Games on 30 June 2020 on the same date as the end of the Foreign Exchange Levy Act 2015.
SOURCE: MATANGI TONGA/PACNEWS
Pacific Islands News Association
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