CDA: QC program is not generous

Despite admission that it favors a revisit of the Investment Incentive Act of 2000, also known as the Qualifying Certificate Program, the Commonwealth Development Authority claims the existing program is not in any way “too generous” to applicant investors.

CDA executive director Manuel Sablan and QC analyst Carline Sablan emphasized this with Saipan Tribune, citing the “caps” on the benefits as one way to disprove the wrong perception that the government is giving away too much to selected businesses.

“It’s not [generous]. We’re not offering 25 years at 100 percent [benefit] and, if you can see, the benefits approved have caps. If we feel that $300,000 is all the CNMI needs to give a project to work, we cap the benefit at that amount,” said Carline Sablan.

She pointed out that “gone are the days that benefits are limitless.”

Both the QC analyst and the CDA executive director support the idea of revisiting the QC program but they emphasized that the specific change the CDA wants is in the way the benefit is determined.

“The current statute [Incentive Act 2000] was not very specific on what would be the benefits to the CNMI. It talks about employment benefit and infrastructure benefit…but there’s no percentage,” explained Manuel Sablan.

Carline Sablan said, “Our recommendation is that relief to be based from the project, meaning it should be tied in the local employment and local purchases. The more U.S. workers employed, the more managerial positions offered to locals, the more local purchases they make, the bigger the benefits,” explained Carline Sablan.

Under the current QC setup, benefits are tied more to the investment amount of the project.

CDA officials disclosed that in recommending QC benefits, the agency—along with the tax division—looks at individual applications. Even if the law provides up to 25 years at 100 percent tax rebates, they said this not often the case.

Manuel Sablan said this is evident in the refusal of some applicants to accept the CDA-recommended tax relief.

“In applying for QC benefit, you have to demonstrate your need for it. There’s also compliance every year on their part,” he said.

To date, the government has issued 15 QCs, of which five are active—meaning they availed of the tax relief approved by the government.

Manuel Sablan maintained that “QC is a viable and good tool” that should not be abused by anyone.

“It’s good to provide relief when relief is necessary,” he said.