Employers are required to withhold payroll tax from employee salaries. This tax is also known as Salary and Wage Earners Tax (SWET) or Pay As You Earn (PAYE) system. Samoa uses a progressive tax system for payroll tax. Payroll tax must typically be remitted to the Ministry of Customs and Revenue on a monthly basis.

National Provident Fund (NPF) Contribution

Samoa has a mandatory social security program called the National Provident Fund. Both employers and employees contribute to the fund. The employer contribution rate is 5% of the employee's gross salary. NPF contributions are usually submitted on a monthly basis directly to the NPF.

Accident Compensation Corporation (ACC) Levy

Businesses are required to pay a levy to the Accident Compensation Corporation to fund accident insurance for employees. ACC levy rates vary depending on the industry and risk classification of the business. Levy payments are made to the ACC, and may be paid annually or in installments.

In Samoa, there are two main types of employee tax deductions: the Payroll Tax (SWET/PAYE) and the Samoa National Provident Fund (NPF) Contributions.

Payroll Tax (SWET/PAYE)

The Payroll Tax, also known as SWET/PAYE, is an income tax that is withheld directly from an employee's salary. All employees with taxable income in Samoa are eligible for this tax. Samoa uses a progressive tax system, meaning that higher income levels are subject to higher tax rates. Employers are responsible for calculating and withholding the payroll tax based on tax tables provided by the Ministry of Customs and Revenue.

Samoa National Provident Fund (NPF) Contributions

The Samoa National Provident Fund (NPF) Contributions are a mandatory social security savings program. All employed individuals are required to contribute to this fund. The employee contribution rate is 5% of their gross salary. These deductions are made directly from the employee's paycheck.

In Samoa, a Value-Added Goods and Services Tax (VAGST) system is in place, which applies to most services provided within the country. The standard VAGST rate is 15%.

Exemptions

Certain services are exempt from VAGST. These include financial services, medical and educational services, and the rental of residential properties.

Zero-Rated Services

Some services may be zero-rated, meaning VAGST is applied at 0%. This mainly includes exported services.

Filing Procedures

Businesses with an annual turnover exceeding a specific threshold must register for VAGST with the Ministry of Customs & Revenue. VAGST returns are generally filed on a monthly or quarterly basis, depending on the company's turnover. For specific forms, instructions, and filing deadlines, consult the Ministry of Customs & Revenue.

Investment incentives are a key part of many business strategies, offering reduced corporate income tax rates and exemptions from import duties for qualifying businesses. Depending on the industry and investment level, businesses may be eligible for a reduced corporate income tax rate (17% instead of the standard 27%) for an initial period (typically 5 years), and exemption from import duties on equipment and building materials used for the approved project. This program focuses on priority sectors such as manufacturing, information technology, tourism, renewable energy, agriculture, and business process outsourcing (BPO). Proposals are submitted to the Samoa Investment Corporation (SIC) along with a detailed business plan and supporting documentation demonstrating eligibility.

Free Zone Incentives

The Samoa Free Zone offers attractive tax benefits for businesses operating within designated free zone areas. These benefits include exemption from corporate income tax for the first 10 years of operation, exemption from customs duties on imports and exports, and a simplified business registration process. Companies involved in manufacturing, warehousing & distribution, international trade, and services (under specific conditions) are eligible for these incentives.

Taxation of International Business Companies (IBCs)

Samoa offers a territorial tax system, meaning IBCs are only taxed on income derived within the country. The benefits of this system include exemption from corporate income tax on offshore income, and no withholding taxes on dividends, interest, or royalties paid to non-resident shareholders. This is open to foreign investors who establish IBCs in Samoa. The application process involves working with a qualified registered agent to complete the incorporation process.