By Pacific Island Times News Staff
More small businesses on Guam will get tax cuts beginning this summer following the signing of Bill 202-36 that increases the gross threshold for limited exemptions on the business privilege tax for small businesses.
The bill, authored by Sen. Mary Camacho Torres, is now Public Law 36-81,
"This bill will provide welcome relief for small businesses," Gov. Lou Leon Guerero said in a letter to Speaker Therese Terlaje.
However, the governor signed the bill with a caveat.
"As we collectively explore ways in which we can strengthen our small businesses, we must also remain mindful of the fact that a reduction of government revenue will further deplete general fund unappropriated revenues, and underscores the fact that the legislature should not attempt to appropriate such funds in advance of the final audit," she said.
The legislature and the administration's finance team were at odds over the $56 million in earned income tax credit funds received by Guam under the American Rescue Plan Act. Senators introduced different bills proposing to tap the EITC funds for various programs.
Administration officials, however, said the EITC fund could not be touched because it has been earmarked for 2021 EITC payments.
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At any rate, the governor said the new BPT law promises to ease more of the economic burden on small businesses.
Public Law 36-81 permanently increases the revenue threshold or the amount of gross receipts eligible for a 3 percent BPT rate instead of the full 5 percent.
It will go into effect on July 1.
Currently, businesses are only eligible for the BPT reduction on the first $250,000 of their gross receipts, provided their gross annual income is between $50,000 and $500,000 during the most recent tax year.
According to the Department of Revenue and Taxation, approximately 90 percent of Guam’s 15,000 BPT filers report less than $500,000 in annual revenue.
“At the start of this pandemic, I committed to reducing the tax rate for our small business owners,” Torres said.
Under the new law, Torres said, 90 percent of local businesses will permanently 3 percent on all their receipts.
"This is a great start for Guam’s business community, and I look forward to continuing to work together to remove barriers for small businesses and entrepreneurship," Torres said.
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