Gov’t drafting regs on tax incentive law

The Commonwealth Development Authority and the Division of Taxation and Revenue have started crafting the implementing guidelines for a recently enacted law which grants tax incentives to new investments and existing businesses under a qualifying certificate program.

CDA Executive Director Marylou S. Ada said they intend to have the implementing rules and regulations for the Public Law 12-32, also known as the Investment Incentive Act, published in the Commonwealth Register by next month.

Ms. Ada, along with officials from the Division of Taxation and Revenue led by Rufin Inos, met with economic and taxation officials from Guam to see how the neighboring island went about its own qualifying certificate program.

“We met with our counterpart office in Guam to determine how they implemented the program and what areas of the program we incorporate and apply here in the CNMI,” she told reporters in an interview.

The CDA officials also disclosed the CNMI delegation talked to members of the Guam business community who participated in the island’s qualifying certificate program.

Under PL 12-32, CDA and the director of the revenue and taxation division are tasked to implement the Commonwealth’s Qualifying Certificate Program.

“We are carefully studying this program to determine if we will extend tax rebates or give businesses tax abatement. We have seen a lot of inquiries from businesses about this program and there has been a lot of interest on it,” said Ms. Ada.

She mentioned that the program is a heavy responsibility for the CDA Board of Directors and management which necessitates their travel to Guam.

“We want to know what we can learn from them. It is going to be a very complicated process but we are going to do it right and not just jump right into it,” said Ms. Ada.

PL 12-32 is a product of cooperative efforts between the Tenorio administration, the Legislature and the business community to lift the islands’ sagging economy. These tax incentives will make the CNMI a more investor-friendly climate.

Gov. Pedro P. Tenorio previously said the Commonwealth must pro-actively seek solutions to resolve the islands’ economic situation as he underscored the importance of concerted efforts in finding ways to address the three-year crisis.

The Investment Incentive Act is the second significant economic measure the CNMI government has approved in the past two months.

Island leaders have high hopes that PL 12-32 will have an immediate impact as many prospective investors are just awaiting the implementation of the qualifying certificate program to set up shops here.

Two new hotels, a peanut butter factory and a hi-tech software manufacturing firm have already expressed interest in investing in the CNMI once the program gets underway.

Under the program, incentives include rebate of up to 100 percent of all taxes paid to the government for a period of not to exceed 25 years or 50 percent tax abatement for the next 50 years.

Beneficiaries must however comply with the conditions to be qualified such as cap on the tax breaks, donations like improvement of public facilities or training program for local workers, and purchase of products or services from CNMI-licensed vendors. (Aldwin R. Fajardo with reports from Benhur Saladores)