Samoa is one of a select few countries that offer non-resident legal entities, known as International Companies (IC) in Samoa. These entities differ from conventional entities in the sense that they are always considered non-resident for tax purposes and as such, cannot have a tax liability in their country of registration (for this reason, they are often barred from doing business locally). Other differences include better privacy protection and fewer compliance requirements. While ICs have typically been used as holding entities, they have also become increasingly popular with location independent business owners in recent years. In this article, I cover how to register a Samoa IC, how to open a business bank account for it, process payments, how the taxation system works, how to dissolve a company and offer insights into the future of doing business with an IC.
Samoa IC
Registration
Samoa, formerly known as Western Samoa, is a small country in the south Pacific. It is part of greater Polynesia and its people are mainly of Polynesian descent with a small European minority. The official languages are Samoan and English, the official currency is the Tala (WST). Samoa is a low income country and the difference with American Samoa is especially stark. The main contributors to the national GDP are currently the agricultural sector, private remittances and development aid. Samoa suffers from an acute obesity crisis with over 80% of its population classified as overweight. This is obviously taking a severe tool on the country’s resources and in a bid to improve and diversify the economy, the government has put a strong focus on the financial services and tourism sectors. The Samoa IC is one of the best IBC-type entities and is especially well suited for assets protection. It also is one of the cheapest to maintain with an annual government fee of only 100$ if prepaying for 20 years.
With that said, the use of local services providers is mandatory for both the registration and maintenance of a Samoa IC, meaning there will be additional fees to pay, on top of the government fees. Those fees are the main reason why registering an IC in Samoa is a lot more expensive than it is to register a company in countries like the US, UK and Canada. Because there is no transparent business registry, you will also need to hire a local attorney to apostille all your business documents before they can be used. In most cases, all these layers of fees add up to between 700-1000 USD at the moment of registration and a further 500-800 USD annually. Documents-wise, you will need a certified proof of ID, a certified proof of address and ideally, some reference letter. Most registered agents will complete the registration process within a week once they have your documents. You will then be courried the company documents and will be able to bring them to a bank to open an account.
Privacy
Privacy-wise, Samoa is fairly decent. Unless you commit a major crime, your information will never be made public or shared with the authorities in your home country. With that said, to open a bank account for your company you will need to provide the bank with your real information (even if using a nominee director / shareholder). This means that in practice, true privacy is only possible if you do not open any bank accounts. This is true even if you bank locally as Samoa has implemented CRS.
Banking
For owners of Samoa ICs, banking is where things will often get complicated. Real complicated. It used to be easy to open bank accounts for ICs but not anymore. Basically, you have the choice of either going with a crappy Samoa-based bank or a better one in a foreign country. In both cases, opening an account will involve gathering a ton of documents, having them certified, having to visit the bank in person and then waiting for weeks (sometimes months) to learn whether the bank wants to do business with you. In most cases (Hong Kong and Singapore especially), you will need to pay a company search fee, which can go as high as 2000 USD, with no guarantee that the account will be opened.
It is possible to use an EMI (such as Wise and Payoneer) but relying on such services with no real backup is not ideal.
Another problem you will encounter is payment processing. To protect themselves against money laundering, most payment processing companies will only deposit funds to a bank account in the country where a company is registered. Because using a Samoa bank essentially means being ripped off, you are left with only a few payment processing options, those who will deposit to a bank in a third country. Such options include PayPal (ridiculously high fees for Samoa companies) and Cybersource (pretty good, owned by Visa).
Taxation
While Samoa ICs are exempt from taxation in Samoa, they are not exempt elsewhere. Unless you have taken care of your personal tax situation already, your Samoa IC is likely to fit within one of two scenarios.
Scenario one: CFC rules
If your country of personal tax residence has CFC rules and you use your Samoa IC as a holding entity, it will likely fall under those rules. This will result in you being liable to tax on your share of the Samoa IC’s profits, even if undistributed.
Scenario two: place of management rules
If you run an active business using your Samoa IC, it will likely be considered resident in the country where it has physical operations (usually where you live). This means that it will have the same tax liabilities as a locally-registered company although without many of the benefits. A way around place of management rules is to move to a true tax haven, or establish physical operations in one.
Dissolution
While dissolving a Samoa IC is usually simple, one should not underestimate the cost of doing so (it starts from around 1000 USD). To initiate the process, simply send the request to your registered agent. They will handle everything and notify you when the company has officially been struck off. Please note that from the moment the process is initiated, it becomes illegal to continue using the IC.
A word of warning (2024)
I know that Samoa sounds great on paper and that its IC structure offers many benefits worth having. The problem, as I hope my article has made clear, is that in practice most of those benefits will not be available for various technical and legal reasons. What will be available is plenty of red tape and complications.
I instead recommend looking into registering a tax neutral entity in a country like the UK, US or Canada. As long as your personal tax residency situation has been taken care of, you will likely be able to run your company tax-free or nearly so, same as with a Samoa IC but with none of the drawbacks and at a lower cost.
