Worldwide Corporate Tax Guide 2022
651
Guam ey.com/GlobalTaxGuides
Tamuning EY EY Building Suite 201 231 Ypao Road Tamuning Guam 96913 Principal Tax Contact
Ian T. Zimms
Business Tax Advisory
Edmund Brobesong
GMT +10 +1 (671) 649-3700 Fax: +1 (671) 649-3920
+1 (671) 649-3700 Email: ian.zimms@gu.ey.com +1 (671) 648-5942 Email: edmund.brobesong@gu.ey.com
International Tax and Transaction Services – Transaction Tax Advisory
Edmund Brobesong
People Advisory Services
Ian T. Zimms
+1 (671) 648-5942 Email: edmund.brobesong@gu.ey.com +1 (671) 649-3700 Email: ian.zimms@gu.ey.com
A. At a glance Corporate Income Tax Rate (%) Capital Gains Tax Rate (%) Branch Tax Rate (%) Withholding Tax (%) (a) Dividends Interest Royalties from Patents, Know-how, etc. Branch Profits Tax Net Operating Losses (Years) (e) Carryback Carryforward
21 21 21 30 30 30 30
(b) (b)(c) (b) (d)
0 Unlimited
(a) The withholding tax rates may be reduced under tax treaties (see Section E). (b) Imposed on payments to nonresidents. (c) Interest on certain portfolio debt obligations issued after 18 July 1984 and bank deposit interest not effectively connected to a trade or business in Guam are exempt from withholding. (d) The branch profits tax is imposed on the earnings of a foreign corporation attributable to its branch, reduced by earnings reinvested in the branch and increased by withdrawals of previously reinvested earnings. (e) This is applicable to losses generated after 2017. A net operating loss is generally limited to 80% of taxable income. Special rules apply to certain types of losses and entities.
B. Taxes on corporate income and gains The system of corporate income taxation in force in Guam, a territory of the United States, is a mirror image of the US income tax system. The applicable law is the US Internal Revenue Code, with “Guam” substituted for all references to the “United States.” Therefore, for a description of the income taxation of corporations resident or doing business in Guam, refer to the sections on
652 G ua m
the United States and substitute “Guam” for each reference to the “United States.” Income taxes are paid to the government of Guam, which administers its tax system. Under an agreement between the United States and Guam, Guam had the authority to separate its system of taxation from the US Internal Revenue Code, effective 1 January 1991. Because a comprehensive Guam Tax Code has not yet been developed, this date has been extended, and the mirror system of taxation continues to apply to Guam until a new code goes into effect. The government of Guam, through the Guam Economic Development Authority, is authorized by law to allow tax rebates to qualified investors. Qualifying Certificates (QCs) for tax incentives are granted based on the investment commitment as well as on the potential for creating new employment and expanding the base of the island’s industry. These incentives are aimed primarily at manufacturers, insurance companies, trusts, commercial fishing companies, corporate headquarters, specialized medical facilities, high-technology companies, agricultural enterprises and tourism-development companies. In general, the tax rebates can amount to up to 75% of income tax paid for up to 20 years. Certain insurance companies may qualify for a 100% income tax rebate.
C. Other significant taxes The following table summarizes other significant taxes. Nature of tax
Rate
Gross receipts tax, on sales of tangible personal property and services, excluding wholesale activities 5% Use tax, on goods imported into and consumed in Guam (businesses are subject to either gross receipts tax or use tax, not both) 4% Hotel occupancy tax 11% Real property tax; imposed on appraised value Land 0.0972% Improvements 0.3888% Additional levy on improvements with a value of USD1,000,000 or more 0.3888% Liquid fuel taxes, imposed per gallon Aviation 8 cents Diesel 14 cents Other 15 cents Alcoholic beverage excise tax Malted fermented beverages 7 cents per 12 fluid ounces Distilled beverages USD18 per gallon Vinous beverages USD4.95 per gallon Tobacco excise tax Cigarettes USD20 per 100 cigarettes Cigars 53 to 66 cents per cigar Other tobacco products USD53 per pound Documents tax, on conveyances and on mortgages of real property 0.25%
G ua m 653 Nature of tax
Rate
Social security contributions (including 1.45% Medicare tax); imposed on Wages up to USD147,000 (for 2022); paid by Employer 6.2% Employee 6.2% All covered wages (for 2022; Medicare tax); paid by Employer 1.45% Employee 1.45% (Effective from 1 January 2013, an additional Medicare tax of 0.9% applies to wages, tips, other compensation and self-employment income in excess of USD200,000 for taxpayers who file as single or head of household. For married taxpayers filing jointly and surviving spouses, the additional 0.9% Medicare tax applies to the couple’s combined wages in excess of USD250,000. The additional tax applies only to the amount owed by the employee; the employer does not pay the additional tax. Employers withhold tax only on wages in excess of USD200,000.) Miscellaneous license fees Various
D. Miscellaneous matters Foreign-exchange controls. Guam does not impose foreign-
exchange controls.
Debt-to-equity rules. The US debt-to-equity rules apply in
Guam.
Transfer pricing. The US transfer-pricing rules apply in Guam.
E. Tax treaties The Guam Foreign Investment Equity Act was signed into law on 24 August 2002 and amends the Organic Act of Guam with respect to the application of the Guam territorial income tax laws. The Guam Foreign Investment Equity Act provides that the tax rate under Sections 871, 881, 884, 1441, 1442, 1443, 1445 and 1446 of the US Internal Revenue Code of 1986, on any item of income from sources in Guam is the same as the rate that would apply with respect to such item were Guam treated as part of the United States for purposes of the treaty obligations of the United States. However, this provision does not apply to determine the tax rate on any item of income received from a Guam payer, if for any tax year, the tax on the Guam payer was rebated under Guam law (see Section B for a discussion of the QC rebates).