Chapter 34

COL12010611GCA FINANCE &TAXATION CH.34TAX REBATES 1CHAPTER 34 TAX REBA TES § 34101. Statement of Legislative Purpose. § 34102. Income Tax Rebate on Certain Income; Definitions. § 34103. Determination of Guam Residency . § 34104. Definition of Earned Income. § 34105. Treatment of Deduction. § 34106. Procedure to Claim Rebated Taxes. § 34107. Rebate Fund. § 34108. Rules and Regulations. § 34101. Statement of Legislative Purpose . The Legisla ture declares it to be the purpose of the Chapter to promote the economic development of Guam by making it possible for individuals who become Guam residents to pay little income tax on their earned income derived from sources outside of Guam. Since this Chapter is not intended to encourage enterprises which have offices in Guam from sheltering income earned in Guam, the be nefits of this Chap ter are intended to apply only with respect to income earned by residents of Guam from sources outside of Guam, the United States, its states, territories or possessions. SOURCE : GC § 19900, as added by P .L. 14 -32. § 34102. Income T ax Rebate on Certain In come; Defini tions .

from sources outside of Guam, the United States, its states, territories or possessions. SOURCE : GC § 19900, as added by P .L. 14 -32. § 34102. Income T ax Rebate on Certain In come; Defini tions . A rebate of seventy -five percent (75%) of personal income tax payable by resident individual taxpayers to the government of Guam on earned income derived from sourc es outside of Guam, the United States, its stat es, territories or possessions is hereby established and declared. The ter m possessions includes the Trust Territory of the Pacific Islands and the Commonwealth of the Northern Marianas. The term resident individual taxpayer means a U.S. citi zen who r esides in Guam within the meaning of §935 of the Internal Revenue Code of 1954, as amended. Such rebate shall be increased to one hundred percent (100%) in the event of a final determina tion by competent authority of the United States Internal Revenue Servic e or a court of compe tent jurisdic tion that such taxpay erresides in the United States within the mean ing of said §935. SOURCE : GC § 19901, as added by P .L. 14 -32. § 34103. Determination of Guam Residency .

of compe tent jurisdic tion that such taxpay erresides in the United States within the mean ing of said §935. SOURCE : GC § 19901, as added by P .L. 14 -32. § 34103. Determination of Guam Residency . COL12010611GCA FINANCE &TAXATION CH.34TAX REBATES 2To claim the rebate authorized by this Chap ter, an individual citizen of the United States shall establish to the satisfaction of the Guam Econom ic Development Authority (the Authority ) that he has been a bona fide resident of Guam within a taxable year in which case amounts received by him from f oreign sources (except amounts paid by the United States, Guam or any agency thereof) which constitute earned income attribut able to services by him performed during such period shall be eligible for the rebate authorized by this Chapter . SOURCE : GC § 1 9902, as added by P .L. 14 -32. § 34104. Definition of Earned Income . For purposes of this Chapter, the term earned income means wa ges, salaries or professional fees and other amounts received as compensa tion for personal services actually rendered, but do es not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which

ived as compensa tion for personal services actually rendered, but do es not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. In the case of a taxpayer engaged in a trade or business in which both personal services and capital are material income -producing factors, under regula tions pre scribed by the Director of Revenue and Taxation (the Direc tor), a reason able allowance as compensation for the personal service ren dered by the taxpayer, not in excess of thirty percent (30%) of his share of the net profits of such trade or business, shall be considered as earned income. SOURCE : GC § 19903, as added by P .L.14-32. § 34105. T reatment of Deductions . In any case in which any amount of income is eligible for the seventy -five percent (75%) rebate, there shall be disallowed as deductions or tax credits, any expenses, losses or other items otherwise deduct ible pr operly allocable to or chargeable against the amounts so eligible for rebate.

ate, there shall be disallowed as deductions or tax credits, any expenses, losses or other items otherwise deduct ible pr operly allocable to or chargeable against the amounts so eligible for rebate. Any claims filed which relate to net operat ing loss carryovers and carrybacks will be reviewed by the Director and to the extent that they relate to income items previously subj ect to rebate, refunds thereof will be repaid to the Authority to the extent of any rebate paid, with any refund in excess of the rebate to be repaid to the taxpayer . SOURCE : GC § 19904, as added by P .L. 14 -32:1. § 34106. Procedure to Claim Rebated T axes.COL12010611GCA FINANCE &TAXATION CH.34TAX REBATES 3A taxpayer seeking a rebate under this Chapter shall attach to his income tax return when filing the same, a form furnished by the Guam Econom ic Development Authority reporting in detail all income and deductions therefrom upon which the claim for a reb ate is based, with such support ing documentation as to residency and otherwise as is required by regulations issued pursuant to § 34108 of this Chapter . The amount of tax on such foreign source income prior to rebate shall be deposited with the

on as to residency and otherwise as is required by regulations issued pursuant to § 34108 of this Chapter . The amount of tax on such foreign source income prior to rebate shall be deposited with the governmen t of Guam at the time of filing the income tax return. The Direc tor shall immediately thereafter cause the return to be reviewed and audited, and if the rebate is found in order shall cause seventy -five percent (75%) of the amount deposited to be returne d to the taxpayer within ninety (90) days from the date of deposit, without interest. SOURCE : GC § 19905, as added by P .L. 14 -32. § 34107. Rebate Fund . Deposits for income tax subject to rebate pursuant to this Chapter shall be placed in a separate acco unt in the Treasury of Guam, herein designated as the Foreign Source Income T ax Rebate Fund . SOURCE : GC § 19906, as added by P .L. 14 -32. § 34108. Rules and Regulations . The Director of Revenue and Taxation and the Board of Directors of the Authority , subject to the ap proval of the Legislature, by resolution, areauthorized and directed to make and promulgate joint rules and regulations for the purpose of implementing the provi sions of this Chapter .

ect to the ap proval of the Legislature, by resolution, areauthorized and directed to make and promulgate joint rules and regulations for the purpose of implementing the provi sions of this Chapter . SOURCE : GC § 19907, as added by P .L. 14 -32. --------- -