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Senate OKs bill on tax rate for foreign corporations
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Posted on Oct 07 2011
By Haidee V. Eugenio
Reporter
Reporter
The Senate adopted Wednesday a conference committee report recommending passage of a bill providing for a tax rate for foreign corporations earning income from outside of the CNMI.
House Bill 17-162, authored by Rep. Ray Basa (Cov-Saipan) and four other lawmakers, also needs House approval before heading to the governor’s desk.
Among other things, a foreign operations corporation has 100 percent rebate offset of Northern Marianas territorial income tax, and is exempt from business gross revenue tax, income tax and license fee except the annual $1,500 FOC license fee.
The bill went back and forth the two houses until a conference committee was formed to break the deadlock on the revenue-generating bill.
HB 17-162 seeks to encourage foreign persons to establish a company in the CNMI and by shifting their income to the islands, pay a low tax on their income from foreign operations.
Such businesses currently do not engage in business or investment activity in the CNMI.
The tax on company income from foreign corporations would be a new source of income to the Commonwealth.
“If the company does engage in business activity in the Commonwealth, the income from the local business activity would be subject to regular Commonwealth taxes,” the bill says.
A “foreign operations corporation” derives at least 90 percent of its income from outside the CNMI, among other things.
The Senate also approved during its Wednesday session a bill expanding the tourism incentive program and charges passengers from non-U.S. destinations a new $15 “travel promotion fee” to help the Marianas Visitors Authority’s tourism promotion.
House Bill 17-179, House Substitute 1, Senate Substitute 2 goes back to the House for action. The bill was introduced by House floor leader George Camacho (Ind-Saipan).
