Samoa Economic Substance Regulations: The Current Position

Economic Substance Regulations in Samoa: The Current PositionCopy link to section

Economic substance regulations require a company to prove it carries on genuine activity, with people, premises, and expenditure, in the place where it books its profits. Many offshore centres enacted such rules between 2018 and 2020 under pressure from the OECD and the EU. Samoa did not. There is no standalone Economic Substance Regulations Act, no substance test, and no substance filing for a Samoa International Company. The position holds as of June 2026, confirmed by the absence of any such instrument in the Samoa Parliament register and in the records of the Samoa International Finance Authority.

This article explains why no economic substance regime applies in Samoa, how the country secured removal from the EU blacklist by a different route, and what foreign owners should watch instead. It is written for non-resident owners of Samoa International Companies, their advisers, and anyone weighing the jurisdiction for a holding or trading structure. The honest bottom line stated up front: the obligation you may expect simply does not exist here, and the reasons matter for how you plan.

Why Economic Substance Rules Exist: The Global BackgroundCopy link to section

The idea behind substance rules is straightforward. Tax should be paid where economic activity actually happens, not where a company is registered on paper.

This principle was crystallised in the OECD's BEPS Action 5 report, released on 5 October 2015, which targeted harmful tax practices and weak transparency. Multinationals had long exploited gaps between national tax systems to shift profits into low- or no-tax jurisdictions, with annual global revenue losses estimated at 4 to 10 percent.

The EU pursued the same goal through its Code of Conduct Group, and in 2017 it published a list of non-cooperative jurisdictions for tax purposes. That list is revised twice a year, in February and October.

In November 2018, the OECD Inclusive Framework adopted a substantial-activities standard aimed specifically at jurisdictions imposing no or only nominal corporate income tax. The response from offshore centres was a wave of economic substance legislation requiring companies in mobile sectors to show "adequate" local activity. Samoa took a different path, as the sections below explain.

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The Legal Basis: Samoa's Tax Regime and the Absence of an ES RegimeCopy link to section

The framework for Samoa's offshore sector is the International Companies Act 1987, as amended. It governs International Companies used for holding assets, international trade, and overseas investment. Nowhere in that statute, nor in any companion instrument, does a substance test appear.

A Samoa International Company is not subject to economic substance requirements. No formal substance regime applies to local companies either.

For years, the jurisdiction ran a status-based exemption: an offshore company that did no local business paid no Samoan tax on its income, whatever the source. That blanket exemption is what drew EU scrutiny and placed the country on the blacklist in 2017.

The reform came through the Miscellaneous (Removal of Tax Exemption for International Companies) Amendment Act 2026, cited as Amendment Act No. 1 of 2026. From 1 January 2028, International Companies lose their full tax exemption.

The system has shifted to a territorial model. Samoa-sourced income is taxed at the standard 27 percent corporate rate, while foreign-source income carries a 0 percent effective rate.

How Samoa Was Removed From the EU Blacklist Without an ES RegimeCopy link to section

The Council of the EU removed Samoa from its blacklist on 17 February 2026, alongside Fiji and Trinidad and Tobago, citing jurisdictions that had "successfully addressed long-lasting deficiencies." The Council press release records the decision.

What secured the delisting was not substance legislation. It was tax reform.

Samoa had been flagged for operating a "harmful preferential tax regime" and for failing to apply BEPS minimum standards. The 2026 amendment converted a ring-fenced, status-based exemption into a defensible territorial tax system, which directly cured the deficiency the EU had identified.

The EU assesses three things: tax transparency, fair taxation, and anti-BEPS measures. Those criteria track the standards developed in OECD forums, including the Global Forum and the Forum on Harmful Tax Practices. By abolishing the ring-fence, the jurisdiction removed the trigger that had defined it as harmful.

Samoa does not appear on any OECD or Financial Action Task Force blacklist. The regulatory work accompanying the delisting, noted in SIFA's Q1 2026 newsletter, centres on stronger AML and counter-financing supervision and the rollout of a beneficial ownership register, not on economic substance.

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Relevant Activities and the Substance Test: What Would Apply ElsewhereCopy link to section

To understand what Samoa does not require, it helps to see the template used in jurisdictions that did legislate. Economic substance laws in those places attach to entities carrying on one or more "relevant activities."

The activities commonly caught are:

• Banking and insurance
• Fund management
• Financing and leasing
• Shipping
• Headquarters and distribution or service-centre operations
• Holding company activities
• Intellectual property holding

Where such a regime applies, an entity conducting a relevant activity must satisfy a three-part test for each one: it must be directed and managed locally, conduct its core income-generating activities locally, and maintain adequate employees, expenditure, and physical presence in the jurisdiction. Failure leads to fines, escalation, and ultimately removal from the register, with information passed to the tax authorities where the parent and beneficial owner reside.

None of this applies in Samoa. The list above describes what would exist if Samoa adopted an equivalent regime, not any current obligation. Because the delisting was achieved through territorial tax reform, the OECD's substantial-activities standard is not triggered for Samoa International Companies, as there is no longer a ring-fenced preferential regime in scope.

Why Samoa International Companies Are Currently Outside ES ScopeCopy link to section

Several features keep the International Company outside substance scope, and they reinforce one another. Unlike the British Virgin Islands or the Cayman Islands, Samoa demands no local employees, no mandatory resident directors, no physical office for the company itself, and no audit.

The OECD's substantial-activities standard was built for two situations: jurisdictions running preferential regimes that ring-fence offshore income, and jurisdictions imposing no or only nominal tax. Samoa's territorial model, taxing local income at 27 percent and exempting foreign income, eliminated the first.

The second is being dismantled too. From 1 January 2028, International Companies become subject to corporate income tax and other direct taxes, which removes the "no or nominal tax" characterisation that would otherwise invite scrutiny.

Two further structural points matter. International Companies are not tax residents and generally cannot claim treaty benefits, so treaty shopping is not a live risk. They are also barred from doing business with Samoan residents, owning local real estate, or operating as a bank or insurer without a separate licence, which means a standard company has no Samoa-source income to shift in the first place.

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Pure Holding Companies and Asset-Holding Structures in SamoaCopy link to section

The International Company fits holding structures, IP ownership, and international trading where the activity sits entirely outside the country. A common pattern places the Samoa company at the bottom of a wider arrangement, holding specific assets beneath an established BVI or Cayman trust that handles top-tier governance.

The company structure is light. At least one director is required, with no residency restriction, and directors may be individuals or corporate bodies; the absence of a local-director rule is a clear point of difference from substance jurisdictions.

No minimum paid-in capital applies. Authorised share capital is usually set at USD 1,000,000 in any currency, with issued capital as low as a single share. A registered office must be kept in Samoa at the address of a licensed trust and management company.

There is no requirement to file accounts with any Samoan authority. Records must, however, be kept for seven years, and an audit is not required where the company conducts no activity in Samoa. With the move to a territorial system, full accounting records over that seven-year period let SIFA confirm that income genuinely arises offshore; this is a recordkeeping duty, not a substance test. For detail on those obligations, see our separate guidance on accounting requirements.

Narrow Exceptions: Licensed and Regulated Activities to WatchCopy link to section

The absence of a substance regime does not mean a free hand. An International Company cannot carry on banking, insurance, reinsurance, fund management, collective investment, trust management, or trusteeship without the relevant licence.

Licensed activities sit under their own statutes administered by SIFA, including the Offshore Banking Act 1987, the International Insurance Act 1988, and the International Trusts Act 1987. A 2019 round of amendments, among them the Trustee Companies Amendment Act, tightened governance over trust and company service providers.

Here is the point a foreign owner should hold onto. A licensed entity, such as an offshore bank, international insurer, fund manager, or trustee company, is bound by that sector's prudential and governance rules, which can include local-management requirements that function like a substance test even though no standalone substance regime exists.

Transparency obligations apply across the board. Samoa participates in the Common Reporting Standard, so financial account information on International Companies is exchanged automatically with account-holders' home tax authorities, and SIFA requires full beneficial ownership, source-of-funds, and purpose information under strict AML and KYC standards.

Consequences of Non-Compliance If an ES Regime Were IntroducedCopy link to section

No substance regime exists, so no substance-specific penalties apply to Samoa International Companies. There is nothing to file and nothing to breach on this front.

For context only, the table below shows the penalty pattern in jurisdictions that did legislate. These figures are not Samoa figures and carry no force here.

What does apply in Samoa are the general duties under the International Companies Act 1988, such as keeping a registered agent and proper records. Breach can lead to deregistration by SIFA. Specific monetary penalties under that Act for record-keeping failures are not published online, so we state the principle rather than invent a figure. Registering an International Company and then trading with Samoan residents breaches the Act and can result in penalties or deregistration.

The Outlook: Possible Future Adoption of Economic Substance RulesCopy link to section

Delisting on 17 February 2026 improved the jurisdiction's standing, which should ease dealings with foreign banks and counterparties, though international monitoring continues. SIFA has committed to maintaining a stable and transparent financial services environment.

The direction of travel reduces rather than raises the chance of a substance regime. Once corporate income tax reaches International Companies on 1 January 2028, Samoa stops being a no or nominal-tax jurisdiction for that class of entity, which removes the principal trigger for an OECD-style substance standard.

A residual risk remains. If the EU or OECD ever made substance legislation a freestanding good-governance test, independent of any harmful-tax finding, the calculus would change. No such binding standard exists, and the OECD's July 2025 progress report on BEPS minimum standards pointed toward simplification of Action 5 peer reviews, not expansion.

The realistic near-term obligations are different ones. The rollout of Samoa's beneficial ownership register and enhanced AML supervision, both flagged in SIFA's Q1 2026 newsletter, are the duties most likely to reach owners before any substance framework could appear. No draft substance bill or public consultation has surfaced.

ConclusionCopy link to section

The practical takeaway is unusual for an offshore guide: there is no economic substance obligation to meet here, and the route Samoa took to clear the EU blacklist, reforming its tax exemption rather than legislating substance, means none is likely soon. A foreign owner should plan around the duties that do bite, namely seven-year recordkeeping, beneficial ownership disclosure, AML and CRS reporting, and the licensing rules for regulated activities.

The one thing to weigh next is the 2028 tax change, when International Companies lose their full exemption. Build that into any structure you set up now, because the zero-tax era for these entities is ending on a fixed date.

How Expanship Can Help Your Business in SamoaCopy link to section

Expanship helps foreign owners read the substance question correctly for Samoa, confirm that no regime applies to their structure, and stay aligned with the obligations that do, including recordkeeping, beneficial ownership, and AML duties. The same team supports the full life of a foreign-owned International Company, from formation through ongoing maintenance.

• Formation of Samoa International Companies and related structures
• Registered agent and registered office through a licensed provider
• Management of ongoing filings and statutory compliance deadlines
• Accounting and record-keeping support across the seven-year retention period
• Substance assessment and beneficial ownership register assistance
• Introductions to banking partners for non-resident entities

To discuss your structure and confirm what applies before 2028, contact Expanship Samoa.

Frequently Asked QuestionsCopy link to section