Treasurer Donald Kruse, chairman of the Tax Exemption Board, has informed the CEO of the ASG Shipyard Carlos Sanchez and Procurement Manager August Curry that the shipyard does not qualify for a tax exemption certificate.
In a June 24 email to the shipyard officials, the Treasurer wrote, “After careful review of the relevant statutes in Chapter 16-Tax Incentives for Businesses—of the American Samoa Code Annotated, we regret to inform you that the Shipyard does not qualify for a tax exemption certificate.”
In the same email, the Treasurer referenced to a correspondence dated June 18, “in which Sanchez agreed to pay the excise tax upfront for the equipment impounded by Customs for the ASPA project at Blunts Point.”
As we’ve reported, a shipment of equipment—delivered two weeks ago—which Sanchez said is for repairs to ASPA water tanks, was not released by Customs until the shipyard paid $30,00 in excise taxes. Sanchez maintains the shipyard was never required to pay excise tax on such imports before, and called it a change of policy by the current administration.
When KHJ News asked the Treasurer what factors the Tax Exemption Board considered in reaching its decision, Kruse referred KHJ News to the same section of the American Samoa Code Annotated, Chapter 16-Tax Incentives for Businesses in American Samoa.
This section states that in order to qualify for a certificate of tax exemption, an industrial or business enterprise must be an enterprise owned by a person who is, or a partnership one of whose members is, a resident of American Samoa; or be a corporation created under the laws of American Samoa or a foreign corporation authorized by the laws of American Samoa to do business in the territory.
After being informed that the shipyard does not qualify for a tax exemption certificate, the Shipyard CEO sought clarification from the Treasurer if the shipyard still has to pay excise taxes on items it purchases from the United States for materials, supplies, tools and equipment it uses for repairs to fishing vessels, government boats and other vessels. Sanchez informed the Treasurer that they stock all that’s necessary for any vessel maintenance orders and repairs. And normally it takes 3 to 4 months to order and ship in these items, and it’s too costly for airfreight.
Sanchez has also requested a meeting with the Tax Exemption Board to present what he called the “unique economic situation of the Shipyard Authority.” He again pointed out that the shipyard has been financially broke many times before and that additional unplanned costs will have an impact on the shipyard’s finances. He asked, “With the change in policy on shipyard excise taxes, does the new administration have a plan to financially sustain shipyard operations, especially payroll, if we come to that situation?”
In response, Kruse said the Tax Exemption Board is looking at the request for a waiver of excise tax on materials and supplies used at the yard.
