Introduced by Rep. Ramon S. Basa, Covenant-Saipan, House Bill 17-163 is the second income generating measure that the Legislature is considering for FY 2012.
Last week, the Senate passed House Bill 17-179 that imposes a $15 “customs and quarantine” fee on carriers for every arriving passenger in the CNMI.
H.B. 17-163 is among the measures discussed during the business forum hosted by lawmakers last January.
It was suggested by Marianas Public Land Trusts consultant, Bruce MacMillan, who said that the tax would entice more investors into the CNMI.
The House passed the measure in July but did not like the Senate’s substitute bill prompting the creation of a conference committee to draft a version acceptable to both houses.
Aside from businesses establishments that operates in the commonwealth, there are foreign companies that operate and earn their main income elsewhere.
Because their range of activity is worldwide through the use of modern electronic technologies like the internet, these businesses can put up offices almost anywhere.
These businesses are called “foreign operations corporations.”
Basa said H.B. 17-163 will encourage these corporations to establish their company offices in the commonwealth which will impose a lower tax rate, called the net foreign income tax, while exempting them from the business gross revenue tax and the NMI territorial income tax.
If it becomes law, the measure will impose a tax of 10 percent per annum on the foreign corporation’s net foreign income. Each corporation will also pay $1,500 for a foreign operations corporation license fee.
H.B. 17-163 also allows the 100 percent rebate of the foreign corporations income tax.
