Toribiong said the bill is to encourage development in Babeldaob.
The proposed “National Capitol Complex Tax Free Zone Act,” Toribiong said will create a tax free zone extending two miles in every direction from the center and the dome on the Olbiil Era Kelulau.In a letter to Senate President Mlib Tmeuchl, Toribiong said that “despite the completion of the Compact Road, the economic development of Babeldaob , particularly the establishment of new business to provide goods and services of its residents, has lagged.”He added that despite the government move to Babeldaob, there is still a slow but steady movement of people to the area.He said this is because of lack of businesses in Babeldaob and that the short term tax incentives to help development there.“While obviously this may mean a slight decrease in government revenues during the period these tax incentives are being offered, the short-term reduction will be repaid multifold when the incentives expire and the businesses that have established themselves once again begin to pay taxes,” Toribiong said.The new bill will extend gross revenue, import and export tax incentives to new and existing businesses located within the tax free zone.The measure also said that the tax incentives to an existing business are for a period of two years so that this is to encourage existing business to continue in operation and to put them on a par with new businesses taking advantage of the tax incentives.The bill proposes tax incentive to a new business for a period of five years and it added that in the event that the tax incentives are not used properly then there is a provision that terminates it and recaptures the taxes that would have otherwise been paid.
