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French Polynesia: New Law Gives Tax Breaks to Some Large Investors

(June 10, 2014) On May 26, 2014, a law was adopted establishing the tax rules for large-scale investments in hotels and tourist businesses in French Polynesia. (Law No. 2014-12, Loi de pays instituant un dispositif en faveur des grands investissements hôteliers et touristiques [National Law on a Measure for the Benefit of Large Investments in Hotels and Tourism] (May 26, 2014), OFFICIAL JOURNAL No. 16 NS, cited in Claire Védrine, French Polynesia: New Tax Measures for Large Investment in Hotels and Tourism, IBFD TAX NEWS SERVICE (May 28, 2014), online subscription database.)

The law states that qualified investments will receive specified tax benefits, including tax exemptions on imported goods needed for the construction, expansion, or renovation of hotels and other buildings for the tourist industry. Additional exemptions apply to:

· environmental, agricultural, and fisheries fees;
· taxes on major projects and roads;
· the consumption tax;
· the tourist development tax;
· taxes on imported electrical equipment;
· customs fees for information technology; and
· the toll tax. (Védrine, supra.)

In addition, qualified companies are granted exemptions for 15 years from property taxes on any construction they complete and for 10 years on corporate profits, once hotel operations begin. (Id.)

The new legislation does not exempt businesses from some other taxes, including the airport tax, and does require them to pay a 2% tax, which will be collected by the customs administration. (Id.)

The abovementioned benefits are available for investments for the building, expanding, or renovating of hotels and other buildings used in the tourism industry, to include rooms, apartments, dining facilities, business centers, sports and wellness centers, golf courses, marinas, and other installations. To qualify for the tax benefits, a business must be established in French Polynesia, be authorized by the French Polynesian President, and have an investment of more than XPF40 billion (about US$456 million) for six years. Once approved, a business may retain most of the benefits for up to eight years. (Id.)

French Polynesia is an overseas collectivity of France comprising five archipelagoes in the Pacific: the Society Islands, the Tuamotu Archipelago, the Gambier Islands, the Marquesas Islands, and the Tubuai Islands. Its status gives it more independence from France than a territory has. Tahiti, in the Society Islands, is the largest island in the five groups and the home of the capital, Papeete. Tourism is the main economic activity. (French Polynesia, BRITANNICA ACADEMIC EDITION (last visited June 9, 2014).)