Bill Seeks To Expand BPT Breaks

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Senator Mary Camacho Torres’ measure to cut taxes for Guam’s small business owners passed unanimously.

PNC’s Destiny Cruz has more…

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Under Public Law 36-27, businesses in Guam are eligible for a business privilege tax reduction, or BPT, on the first $250,000 of their gross receipts, granted their gross annual income is between $50,000 and $500,000 during the most recent tax year.

However, according to the Department of Revenue and Taxation, approximately 90% of Guam’s 15,000 BPT filers report less than $500,000 in annual income. Moreover, according to Camacho Torres, of that amount, 85% were in the lowest bracket between $50,000-$250,000 a year.

Bill 202-36 aims to permanently expand the reduced BPT rate up to $500,000 of a businesses’ gross receipts. Camacho Torres said the bill affects 5% of those who reported income between the $250,000-$500,000 bracket.

Senator Camacho Torres addressed the fiscal impact prior to the bill’s passage. She stated that Bill 202 would not jeopardize other critical funding sources. According to historical data from DRT, Bill 202’s potential impact on the BPT revenue falls between $900,000-$1.1 million.

Additionally, she stated that the Burea of Budget and Management Research’s most recent consolidated revenue and expenditure report indicated that the BPT collections are currently above adopted revenue levels. Furthermore, Camacho relayed that DRT believes that any anticipated revenue loss may be offset on a residual basis through the payment of income taxes on net operating profits once Guam’s economy rebounds from the COVID-19 Pandemic.

Camacho Torres stated that the reduction in tax revenue would not impact or violate the provisions of the American Rescue Plan Act of 2021.

Camacho Torress stated further that the final rule recognized three sources of funds that may reduce net tax revenue.

These three sources include organic revenue growth, an increase in the tax rate, and specific cuts in spending. Overall, Camacho Torres reiterated that this measure should not result in a revenue shortfall or jeopardize Guam’s standing with ARPA.