Investors seek tax breaks from gov’t

Two new hotels, a peanut butter factory and a hi-tech software manufacturing firm may open shops in the CNMI once the government implements a proposal granting tax breaks to new investments as well as existing businesses.

HB 12-199, now known as the “Investment Incentive Act,” cleared the Senate on Wednesday, drawing closer to the efforts to boost the islands’ flagging economy.

“There’s a light at the end of a very long dark tunnel.. if we come together,” House Speaker Benigno R. Fitial said in pushing the legislation.

He disclosed these potential investors during a House session the other day following a visit on Guam by some members of the Legislature and business leaders belonging to the Strategic Economic Development Council.

According to Mr. Fitial, they were informed that two hotel developments have been waiting for the bill to become law before they start the projects.

Other investors are eyeing a factory to produce peanut butter for export to the U.S. and Canada, as well as a firm to manufacture software products, he said.

The news came as senators finally approved HB 12-199 after almost four months of review by the Senate Committee on Resources, Economic, Development and Program chaired by Floor Leader Pete P. Reyes.

The measure was amended by the committee to reflect the broader scope of the activities eligible under the qualifying certificate program, Mr. Reyes said.

The House version was limited to hospitality and technology-related activities, but the Senate expanded the scope to include any economic activity deemed in the best interest of the Commonwealth.

Sponsored by House Floor Leader Oscar M. Babauta, it now heads to the lower house again to accept amendments inserted by senators before it goes to Gov. Pedro P. Tenorio for signing into law.

While the nine senators voted overwhelmingly in favor of the bill, it almost got derailed as they debated whether existing recycling business that has capital less than the required half-a-million dollars investment could qualify in the program.

Senate Vice President Thomas P. Villagomez maintained the proposal should not be limited to new investors, but also to existing businesses that recycle waste.

“If we’re satisfied with the number of businesses and we don’t want to attract new investments, this bill is useless,” argued Mr. Reyes.

The REDP had solicited comments from the Saipan Chamber of Commerce, the Commonwealth Development Authority as well as potential investors in drawing up a new plan.

Citing the change in global trade trends, the committee noted the CNMI may head to greater economic turmoil if it fails to seek new investments to stimulate the local economy.

The proposed qualifying certificate program will foster an investor-friendly economic climate in the Commonwealth by offering potential investors the opportunity to apply for tax abatements and rebates, it said.

Adequate safeguards have been incorporated in the bill to ensure that tax relief benefits are issued and endorsed wisely by agencies, such as CDA and the revenue and taxation division which will be tasked to implement the program.

There are also system in place for monitoring continued compliance of investors who have been granted tax relief status, the committee explained.