Chapter 11

2 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 1CHAPTER 11 GUAM TAX COMMISSION SOURCE: This Chapter was enacted in its entirety by P.L. 2 7-056:2 (Dec. 17, 2003). Repealed and reenacted in its entirety by P .L. 33-027:2 (May 7, 2015). 2015 NOTE: This Act shall be cited as the Guam Tax Commissio n Act pursuant to P.L. 33-027:1. § 11101. Legislative Findings and Intent. § 11102. Creation. § 11103. Definitions. § 11104. Membership. § 11105. Subcommittees. § 11106. Duties. § 11107. Authority. § 11108. Administration. § 11109. Dissolution. § 11110. Severability. § 11101. Legislative Findings and Intent. I Liheslaturan Guåhan finds that since 1950, under the Organic Act of Guam, the government of Guam has administered a Gua m Territorial Income Tax which mirrors the U.S. Federal Income Ta x (48 U.S.C. §1421i(a)). The Organic Act further provides under §1421i(a) that, in addition to the mirror tax, the Legislature of Guam is authorized to 'levy a separate tax on all taxpayers in an amount not to e xceed 10 per centum of their annual income tax obligation to the Governmen t of Guam.' I Liheslaturan Guåhan further finds that in the Tax Reform Act of 1986 (Public Law 99-514: §1271),

ount not to e xceed 10 per centum of their annual income tax obligation to the Governmen t of Guam.' I Liheslaturan Guåhan further finds that in the Tax Reform Act of 1986 (Public Law 99-514: §1271), the United States Congr ess authorized the government of Guam to '[enact] laws (which shall ap ply in lieu of the mirror system) with respect to income - (1) from sources w ithin, or effectively connected with the conduct of a trade or business w ithin, any such possession, or (2) received or accrued by any resid ent of such possession.' In order to implement this section of law, an implemen ting agreement must be in effect between the United States and Guam. Such an agreement was drafted and signed by the Governor of Guam, the Dir ector of Revenue and Taxation and the Assistant Secretary of the United States by April 5, 1989, but is not in effect pursuant to Public Law 20-181. Once such an agreement COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 2is entered into and a local tax code is created, re venue, adjusted for inflation, shall not be less than what was received by Guam th e fiscal year preceding the implementation year.

TAX COMMISSION 2is entered into and a local tax code is created, re venue, adjusted for inflation, shall not be less than what was received by Guam th e fiscal year preceding the implementation year. I Liheslaturan Guåhan finds that the government of Guam has implemented a number of taxes to provide revenue. T hese taxes include the Documents Tax found in 11 GCA, Chapter 20; the Annu al Excise and Admission Taxes found in 11 GCA, Chapter 22; the Re al Property Tax found in 11 GCA, Chapter 24; the Business Privilege Tax found in 11 GCA, Chapter 26, Article 2; the Alcoholic Beverage Tax f ound in 11 GCA, Chapter 26, Article 3; the Liquid Fuel Tax found in 11 GCA, Chapter 26, Article 4; the Automotive Surcharges found in 11 GC A, Chapter 26, Article 5; the Tobacco Tax found in 11 GCA, Chapter 26, Art icle 6; the Use Tax found in 11 GCA, Chapter 28; and the Hotel Occupanc y Tax found in 11 GCA, Chapter 30. I Liheslaturan Guåhan finds that Governor Ricardo J. Bordallo established a Guam Tax Advisory Committee, pursuant to Executive Order 1986-09; that Governor Joseph F. Ada established th e Guam Tax Reform Commission in Executive Order 87-6; and that Govern or Felix P.

lished a Guam Tax Advisory Committee, pursuant to Executive Order 1986-09; that Governor Joseph F. Ada established th e Guam Tax Reform Commission in Executive Order 87-6; and that Govern or Felix P. Camacho established the Tax Conversion and Reform Commissio n in Executive Order 2003-04. Each of these commissions were formed to r eview and propose changes to Guam’s tax structure and/or policies. I Liheslaturan Guåhan further finds that a number of commissions were established through legislative mandates to re view and make recommendations on tax policy, including the Guam T ax Code Commission established by Public Law 20-181; the Guam Finance Commission established by Public Law 22-74; and the Legislativ e Tax Review Commission established by Public Law 27-56. I Liheslaturan Guåhan finds that the Legislative Tax Review Commission and the previous commissions served a us eful role in allowing policymakers and interested members of the communit y to review the tax structure and policies on Guam and develop proposal s for their reform. Efforts at reforming Guam’s tax system must continu e.

policymakers and interested members of the communit y to review the tax structure and policies on Guam and develop proposal s for their reform. Efforts at reforming Guam’s tax system must continu e. Systematically reviewing the major components of Guam’s tax code w ith members of the community can grant policymakers the ability to foc us on the larger picture of what a reformed tax code can deliver for the peo ple of Guam. A systematic review would cover not only provisions t hat narrowly affect a few businesses or a particular industry, but also how t he code is structured to COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 3promote economic efficiency, equity, simplicity, en forceability, accountability, and social responsibility. It is, therefore, the intent of I Liheslaturan Guåhan to establish the Guam Tax Commission to improve Guam’s tax structure and policies, thereby promoting economic efficiency, equity, simp licity, enforceability, accountability, and social responsibility. § 11102. Creation. There is hereby created a Guam Tax Commission, whic h shall have the duties and powers as prescribed by the provisions o f this Chapter. § 11103. Definitions.

ocial responsibility. § 11102. Creation. There is hereby created a Guam Tax Commission, whic h shall have the duties and powers as prescribed by the provisions o f this Chapter. § 11103. Definitions. As used in this Chapter, unless the context in whic h they are used requires a different meaning: (a) Commission means the Guam Tax Commission. (b) Chairperson means the chairperson of the Commis sion. § 11104. Membership. (a) Members. There shall be ten (10) members of th e Commission, which are: (1) the chairperson of the committee of I Liheslaturan Guåhan with jurisdiction over tax policy matters, or his/h er designee from among the Members of I Liheslaturan Guåhan , who shall serve as Chairperson of the Commission; (2) the chairperson of the committee of I Liheslaturan Guåhan with jurisdiction over budgetary matters or, if suc h chairperson also has jurisdiction over tax policy matters, then the Spea ker of I Liheslaturan Guåhan shall designate a member of the majority to serve, who shall serve as Vice Chairperson; (3) the minority leader of I Liheslaturan Guåhan or his/her designee; (4) an economist, selected by the Chairperson, with a master’s degree or doctorate in economics

shall serve as Vice Chairperson; (3) the minority leader of I Liheslaturan Guåhan or his/her designee; (4) an economist, selected by the Chairperson, with a master’s degree or doctorate in economics from an institutio n of higher learning accredited by an accreditation agency recognized by the U.S. Secretary of Education; COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 4(5) a Certified Public Accountant selected by the C hairperson from among three (3) names submitted by the Guam So ciety of Certified Public Accountants of currently licensed Certified Public Accountants in good standing with the Guam Board of Accountancy; (6) a banking professional selected by the Chairper son from among three (3) names submitted by the Guam Bankers Association; (7) a member selected by the Chairperson from the n ames of among three (3) active members submitted by the Cha mber of Commerce; (8) a member selected by the Chairperson from among the names of three (3) active members submitted by the Women’ s Chamber of Commerce; (9) an attorney specializing in tax laws selected b y the Chairperson from among three (3) names submitted by the Guam Bar Association; and (10) an individual

ted by the Women’ s Chamber of Commerce; (9) an attorney specializing in tax laws selected b y the Chairperson from among three (3) names submitted by the Guam Bar Association; and (10) an individual designated by I Maga’lahen Guåhan . (b) Ex Officio Members. The Commission shall have e x officio members, which are: (1) the Guam Congressional Delegate, or his/her des ignee; (2) the Speaker of I Liheslaturan Guåhan ; (3) the Public Auditor; (4) the Attorney General; (5) the Director of the Department of Revenue and T axation; (6) the Director of the Department of Administratio n; (7) the Director of the Bureau of Budget and Manage ment Research; (8) the Administrator of the Guam Economic Developm ent Authority; (9) the Chief Economist of the Guam Department of L abor and/or the Bureau of Statistics and Plans; and COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 5(10) additional individuals appointed by the Chairp erson who may provide expertise and knowledge relative to the Com mission’s duties. (c) The Chairperson shall, within thirty (30) days, solicit the selection of three (3) names from each organization listed in items (5), (6), (7), (8), and (9) of Subsection

the Com mission’s duties. (c) The Chairperson shall, within thirty (30) days, solicit the selection of three (3) names from each organization listed in items (5), (6), (7), (8), and (9) of Subsection (a) of this Section to serve on the Commission. The Chairperson shall appoint an individual from the th ree (3) names provided by each such organization at his/her earliest conve nience. (d) Commission members shall receive no compensatio n but may be reimbursed by I Liheslaturan Guåhan for actual expenses incurred in the performance of their duties, subject to submission of documentation by the Chairperson and approval by the Chairperson of the Committee on Rules of I Liheslaturan Guåhan . (e) Each member appointed to serve in the Commissio n shall serve from the date of appointment until the Commission i s dissolved pursuant to § 11109 of this Chapter. If any vacancy occurs in t he appointed membership of the Commission prior to the dissolution of the C ommission pursuant to § 11109 of this Chapter, the appointing authority sha ll appoint such replacement members in accordance with this Section , and shall serve until the Commission is dissolved pursuant to § 11109 of this Chapter,

this Chapter, the appointing authority sha ll appoint such replacement members in accordance with this Section , and shall serve until the Commission is dissolved pursuant to § 11109 of this Chapter, except that if the vacancy is of an individual selected by an o rganization pursuant to Items (5), (6), (7), (8), or (9) of Subsection (a) of this Section, then one (1) of the remaining individuals selected shall be appo inted to serve until the Commission is dissolved pursuant to § 11109 of this Chapter. § 11105. Subcommittees. The Chairperson shall establish such subcommittees as deemed appropriate to facilitate the work of the Commissio n. The Chairman shall select members and appoint a chairperson to any sub committee formed pursuant to this Section. § 11106. Duties. The Commission shall: (a) compile the records and work products of previo us commissions, to include the commissions formed unde r Executive Orders 1986-09, 1987-06, and 2003-04; and Public La ws 20-181, 22- 74, and 27-56; COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 6(b) review Guam’s tax structure and tax policies, i ncluding tax exemptions and credits, which may include a compara tive analysis of

6; COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 6(b) review Guam’s tax structure and tax policies, i ncluding tax exemptions and credits, which may include a compara tive analysis of such policies in relation to other jurisdictions wi thin the United States; (c) review the procedure and policy options availab le to the government of Guam with regard to de-linking from t he U.S. Internal Revenue Code under §1271 of Public Law 99-514; (d) review estimates of the fiscal impact of potent ial changes to Guam’s tax structure and policies; (e) develop informational reports and/or recommenda tions regarding Guam’s tax structure and tax policies, pr ocedure and policy options available to the government of Guam with re gard to de-linking from the U.S. Internal Revenue Code as deemed appro priate by the Commission, and the fiscal impacts of potential cha nges to Guam’s tax structure and policies; (f) develop a uniform tax code for Guam; and (g) transmit a copy of any such reports and/or reco mmendations as adopted by the Commission regarding tax policy t o I Maga’lahen Guåhan and the Speaker of I Liheslaturan Guåhan . § 11107. Authority.

g) transmit a copy of any such reports and/or reco mmendations as adopted by the Commission regarding tax policy t o I Maga’lahen Guåhan and the Speaker of I Liheslaturan Guåhan . § 11107. Authority. Government of Guam agencies and departments, includ ing autonomous entities, shall make available to the Commission in a timely manner such data and technical support as is necessary for it t o perform its duties as provided in this Chapter. The Commission shall be a uthorized to: (a) receive and compile the records and work produc ts of previous tax commissions from agencies and instrume ntalities of the government of Guam, to include the tax commissions formed under Executive Orders 1986-09, 1987-06, and 2003-04; and Public Laws 20- 181, 22-74, and 27-56; (b) request and receive reports from the Department of Revenue and Taxation relating to the application of provisi ons of Guam’s tax law, to include the tax laws under Title 11 of the Guam Code Annotated, and the Guam Territorial Income Tax admi nistered under Title 48 U.S.C. §1421i, including the use of tax ex emptions, tax deductions, and tax credits by Guam taxpayers; COL12420152 GCA LEGISLATIVE BRANCH CH.

Guam Territorial Income Tax admi nistered under Title 48 U.S.C. §1421i, including the use of tax ex emptions, tax deductions, and tax credits by Guam taxpayers; COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 7(c) receive copies of and review such documents as exist in the government of Guam relating to de-linking from the U.S. Internal Revenue Code under §1271 of Public Law 99-514; (d) communicate with the U.S. federal government re garding Guam’s tax system, relevant domestic and internatio nal tax laws, tax treaties, and tax agreements which may bear upon th e present and future relationship between the United States and G uam relative to taxes, and propose modifications of such tax laws, tax treaties, and tax agreements which may benefit Guam’s economy and/or government; (e) communicate with the U.S. Department of Treasur y with regard to the issue of de-linking from the U.S. Int ernal Revenue Code under §1271 of Public Law 99-514, to ascertain the procedure and guidelines that should be followed for such a polic y change and the impacts to local and federal tax authority from suc h a policy change; (f) request and receive estimates from the Departme nt of

d guidelines that should be followed for such a polic y change and the impacts to local and federal tax authority from suc h a policy change; (f) request and receive estimates from the Departme nt of Revenue and Taxation and/or the Bureau of Budget an d Management Research of the fiscal impact of potential changes to Guam’s tax structure and policies; (g) examine any document, report or data, including programs and data files, held by any agency or instrumentali ty of the government of Guam, which agencies are required to cooperate w ith the Commission and its employees in any such examinatio n, except as provided by United States and Guam law regarding th e confidentiality of specific tax return information; (h) to issue subpoenas, to compel attendance of wit nesses and the production of electronic and/or physical books, rec ords, papers, accounts, reports, and documents, as necessary to a chieve the mandates of the Commission, which shall be provided in such a manner as to ensure the confidentiality of specific tax return i nformation as protected by United States and Guam law; (i) administer oaths relative to testimony and docu ments provided to the Commission; (j) meet from

the confidentiality of specific tax return i nformation as protected by United States and Guam law; (i) administer oaths relative to testimony and docu ments provided to the Commission; (j) meet from time to time, as determined by the Ch airperson, to execute its duties; and COL12420152 GCA LEGISLATIVE BRANCH CH. 11 GUAM TAX COMMISSION 8(k) solicit information and advice from various sou rces on the present tax structure and recommended changes, whic h may include local and national non-governmental organizations, and agencies of the government of Guam. § 11108. Administration. For administrative purposes, clerical support and n ecessary funding, the Commission shall be accommodated as necessary by I Liheslaturan Guåhan . Should data and technical support necessary to acco mplish its duties as provided in this Chapter be unavailable from govern ment of Guam entities and/or personnel, I Liheslaturan Guåhan may enter into contractual agreements with private consultants as it deems nec essary to perform those duties, giving preference to those currently licens ed to do business on Guam. I Liheslaturan Guåhan shall approve the funding of the Commission consistent with its Standing

c essary to perform those duties, giving preference to those currently licens ed to do business on Guam. I Liheslaturan Guåhan shall approve the funding of the Commission consistent with its Standing Rules. § 11109. Dissolution. The Commission may be reconstituted and shall be re convened by the chairperson in the following legislative term, purs uant to § 11104 of this Chapter. § 11110. Severability. If any provision of this Chapter or its application to any person or circumstance is found to be invalid, or contrary to law, such invalidity shall not affect other provisions or applications of this Chapter which can be given effect without the invalid provision or application , and to this end the provisions of this Chapter are severable. --------- COL1242015