Any individual proprietor or entity or legal arrangement carrying out a business in Samoa must register for income tax and declare their income on an annual basis.

For more information on Income Tax – refer to Information Sheet IS01: Income Tax.

The following are types of income tax (or simply put, methods of capturing income tax) that are given separate treatments under our Income Tax Act 2012.

a. Salary and Wage Income Tax

This is a type of income tax (not a separate tax) that is imposed directly on employees’ salary and wage income earned from employment or from employer. This tax is also referred to as ‘pay as you earn’ (PAYE) tax and the obligation is placed on the Employer to withhold the correct PAYE tax at applicable progressive tax rates when paying out his/her employee’s salary or wage income.

If you have staff or employees, you must register as an Employer by completing and signing the PAYE Registration Form. For each pay period, you as the employer need to record wage income details for each employee showing: (a) total gross income earnings, including taxable allowances; and (b) amount of PAYE tax deducted.

You, as the employer, are required to file a monthly P4 return. There are penalties for filing and paying the PAYE tax amount late. Also, it is an offence if you do not deduct PAYE tax from employees, or you deduct PAYE tax but fail to pay it to the Inland Revenue. If found guilty of this type of offence it can lead to fines or imprisonment (or both).

For more information on PAYE – refer to Information Sheet IS02: Salary and Wage Income Tax or PAYE:

b. Provisional Tax

This is a requirement for you to pay your income tax payable in advance, which is done in three (3) instalment payments each year.

The amount of provisional tax depends on your income tax liability of the previous year, which is then divided by three (3). If your tax liability is less than SAT$500, you are required to pay the full amount in the first payment which should be in March (rather than in three (3) instalments).

c. Withholding tax from personal including professional services

The Income Tax Act 2012 provides for two (2) types of methods to withhold (income) tax from income earned by resident persons and non-resident persons under a contract for services (either verbal or written). It is important to note that this is not an add-on tax, but a direct income tax withhold by payer of contract during progress payments stipulated under the contract agreement. Contractors who are intending to bid for a government related work under a contract of services must understand the purpose of this withholding tax depending on your residency status.

Withholding tax is a direct form of income tax that is imposed on the total contract price, including reimbursements and materials. If you are a registered resident contractor, then 10% WHT rate is applicable and WHT will be deducted and remitted by payer to IRS from every progress payment and will be treated as an income tax credit against your final income tax liability when you file your respective tax year’s income tax return. If you are a non-resident contractor, based overseas, a 15% WHT rate will apply on your progress contract payments and that will be your final income tax payable for the income sourced or earned from Samoa.

For New Zealand residents, given the existing DTA between Samoa and New Zealand, make sure you check with NZ Inland Revenue on your income tax obligations before you submit your final bid proposal. It is also good sense to check with the Ministry (i.e. IRS) for more clarity.

i. Resident Person (resident individual/company/partnership/trust/government of Samoa/local authority)

This only applies if a government entity (Ministry, company controlled by government or a local/public authority) is paying a contract fee to a resident person for personal including professional services. The government entity is required to withholding 10% from the total amount of the contract fee paid to the resident person.

ii. Non-resident Person (any person who is not a resident person)

This applies where interest, royalty, insurance premium, management fee, fees for personal including professional services, or natural resource amounts, is paid by a person in Samoa to a non-resident person. The person in Samoa paying the non-resident person must withhold 15% from the amount paid. The 15% tax withheld is a ‘final tax’ which means it is not subject to deduction and the non-resident is not required to file any tax return.

For government contracts involving non-residents, as proof (for the non-resident’s country of residence tax administration) that non-resident withholding tax has been paid in Samoa, a P5 Withholding Certificate is issued by the Ministry of Finance being the main government body that issues payment for all government contracts. Non-resident contractors should take note of this certificate and make sure to contact the Ministry of Finance directly.