SEDC forms task force to study why QC program not working

The Strategic Economic Development Council is forming a special committee to study why the CNMI’s qualifying tax certificate program was not working.

SEDC chair Marian Aldan Pierce said the organization of government and business officials were concerned that investors were not benefiting from the tax relief program that the SEDC had initiated.

“We’re going to establish an ad hoc task force. We will at why the QC program is not working. The SEDC was responsible for authoring that particular legislation several years ago. We just have to look at why it’s not working,” said Aldan Pierce.

Several hotels have applied for tax abatement under the QC program for renovations they have done or are doing on their properties. While some have been declined, other hotels have turned back offers of tax rebates or abatements due to the excessive conditions that accompany the investment incentive.

Specifically, the hotels have complained of requirements concerning local hiring, wage, and earning thresholds.

Hyatt Regency Saipan, Dai-Ichi Hotel Saipan Beach, and Tinian Dynasty Hotel and Casino have all failed to finalize their QC applications.

The only remaining hotel that has a pending application is World Resort Saipan, which plans a $25.5-million development project that includes the construction of a water park and improvements to rooms and common areas.

Lynn Knight, chairwoman of the Hotel Association of the Northern Mariana Islands, said earlier that the hotels could have made bigger investments had they been offered tax relief by the government.

The Investment Incentive Act of 2000 encourages economic development in the CNMI by offering tax breaks to investors that engage in or implement a business project or activity.

Eligible businesses under the law may apply and receive a qualifying certificate executed by the governor, as recommended by the Commonwealth Development Authority.

The QC program allows a qualified investor to receive rebates and/or abatements of up to 100 percent for a period of 25 years.

Business activities targeted by the program include franchise restaurants, water parks, aquariums, cultural centers, theme parks, resort hotels and condominiums, golf courses, convention centers, CNMI-based airlines, and manufacturing of high technology products.