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Western Samoa Creditor Controlled International Company

Western Samoa offers a company without share capital. It is "owned" by the holder(s) of bearer debentures. It is possible to allot a non-voting redeemable preference share to a non-resident of Australia to ensure the company is in fact a "company" rather than some exotic derivative, if this is felt necessary.

From 1 July 1990, Australian residents with an interest in a Controlled Foreign Corporation ("CFC") are subject to accruals taxation on the share of the income of the CFC to which they are entitled to receive by virtue of their shareholding, unless the CFC is subject to income tax in a comparable tax jurisdiction.

A foreign company's status as a CFC requires it to be controlled by Australian residents. The word "controlled" is not specifically defined in the Income Tax Assessment Act 1936 ("the Act"). There is an argument that control can only vest with shareholders, in which case a Western Samoa Creditor Controlled International Company ("CCIC") whose sole shareholder is not a resident of Australia, but whose Australian investors merely hold bearer debentures, is not a CFC. If this view is correct, then none of the provisions of Part X apply to an Australian resident debenture holder and no attribution of income occurs. There are no reporting requirements as the debenture holder is not an attributable taxpayer.

The alternative view is that the subjective de facto control test of section 340(c) of The Act does not require control to vest in shareholders, and a CCIC whose fate vests in the hands of an Australian resident debenture holder is a CFC within the meaning of Part X.

Assuming this second view is correct, to enable the Australian resident to be subject to accruals taxation, his Attributable Income must be calculated, and this is where the provisions of Part X of the Act are seriously deficient. In normal situations an Australian resident's attributable interest in a CFC is the same as his Direct Control Interest under section 356. Where, however, the subjective de facto control test applies under section 340(c), the resident is deemed, pursuant to section 350(c), to have a direct control interest of 100%, but his Attribution Percentage is calculated in accordance with his actual interest in the CFC as established under section 356(1). This section specifically limits attribution interests to shareholders and share capital.

So under the second view, all of the provisions of Part X of the Act apply to CCICs, except the final step. There is no attribution interest held by the Australian resident in the CFC and therefore no attribution is possible. Part X of the Act is aborted and no accruals taxation applies.

Whichever view of the subjective de facto control test of section 340(c) of the Act is correct, attribution of income cannot apply to the Australian resident debenture holder making the CCIC an effective tax deferment entity.

A Western Samoan Creditor Controlled International Company has the following characteristics:


CCICs pay no taxes in Western Samoa.


As described above, a CCIC can operate without share capital and without shareholders, and all the usual rights which would normally be exercised by the shareholders accrue to the holder of the bearer debenture.


A minimum of one director is required and corporate directors are permitted. Details do not appear on the public file.


A brief annual return must be filed but no accounts need be filed. It should be noted that penalties will be incurred if the licence fee is not paid when due.


Incorporation can be achieved within 24 hours. However, it does take approximately 1 week for documents to arrive from Western Samoa. We do not keep ready-made companies in stock available for immediate purchase.


Names must end with one of the following words or abbreviations thereof - Limited, Corporation, Incorporated, Societe Anonyme or Sociedad Anonima.

The following words and their associated activities cannot be used: Assurance, Bank, Building Society, Chamber of Commerce, Chartered, Cooperative, Imperial, Insurance, Municipal and Royal.


As a matter of local company law, the company MUST maintain a registered office address within Western Samoa and must also appoint a Western Samoan resident as secretary and registered agent. We would generally provide these services as part of the domiciliary service fee.