Employers in Guam have several tax responsibilities. These include contributing to Social Security and Medicare taxes, paying unemployment insurance, providing workers' compensation insurance, and paying a Gross Receipts Tax on their business revenue.

Social Security and Medicare Taxes

Employers are required to contribute 6.2% of an employee's gross wages up to the annual Social Security wage base towards Social Security taxes. Additionally, employers are also required to contribute 1.45% of an employee's gross wages toward Medicare taxes, with no wage limit.

Unemployment Insurance (UI)

Employer contribution rates for unemployment insurance in Guam vary and are determined based on the employer's experience rating.

Workers' Compensation Insurance

Employers in Guam are generally required to carry workers' compensation insurance for their employees. This insurance is obtained from private insurance providers, with premiums varying based on the industry sector and associated workplace risks.

Other Employer Taxes

In addition to the federal taxes, employers in Guam must pay a Gross Receipts Tax (effectively a sales tax) on their business revenue.

Calculation and Payment

Employers are responsible for withholding the employee's share of Social Security, Medicare, and any applicable income taxes from their wages. They must then remit both employer and employee contributions to the appropriate agencies. Most employer taxes in Guam are paid to the Guam Department of Revenue and Taxation.

Guam has its own income tax system that closely mirrors the U.S. federal income tax structure. It uses a progressive tax system where higher-income earners pay a higher tax rate. Employers are required to withhold Guam income tax from employee paychecks throughout the year.

Social Security and Medicare Taxes

Employees contribute 6.2% of their gross wages up to the annual Social Security wage base towards Social Security taxes. They also contribute 1.45% of their gross wages toward Medicare taxes, with no wage cap.

Other Potential Deductions

If your employer offers a retirement savings plan, such as a 401(k), contributions may be deducted from your pre-tax income. Contributions towards employer-sponsored health insurance plans may also be deducted from your pre-tax salary.

Tax Returns

Individuals are generally required to file both a U.S. federal income tax return and a Guam territorial income tax return annually. Returns are due on April 15th (or the following business day if April 15th falls on a weekend or holiday).

Guam's tax system generally mirrors the U.S. federal system. It's essential to consult the most accurate and up-to-date information.

Guam, unlike most U.S. territories, does not have a Value-Added Tax (VAT). Instead, it relies on a different tax system. The U.S. federal VAT, also known as the National Sales Tax, has never been implemented in Guam.

Guam's Tax System

Guam's primary source of local revenue comes from its General Sales Tax (GST), which is levied at a rate of 4% on most goods and services sold at retail in Guam. This tax applies to most business transactions, but certain exemptions exist, including for educational services, healthcare, and public transportation services.

VAT vs. GST

While both VAT and GST are consumption taxes, they differ in their mechanics. A VAT is a tax levied on the value added to goods and services at each stage of production and distribution. In contrast, a GST is typically a simpler tax applied only at the point of final sale to the consumer.

Why Guam Doesn't Have a VAT

There are several reasons why Guam doesn't have a VAT:

• Alignment with the U.S. Tax System: Guam's tax structure is designed to be consistent with the U.S. federal tax system, which does not have a national VAT.
• Administrative Complexity: VAT can be administratively complex to implement and enforce, which may be a consideration for a smaller island territory like Guam.
• Potential Economic Impact: The impact of VAT on Guam's economy, particularly on tourism and small businesses, has not been definitively studied.

Guam's primary tax incentive program is the Qualifying Certificate (QC) Program, which is administered by the Guam Economic Development Authority (GEDA). This program offers significant benefits to eligible businesses, including corporate income tax rebates and other tax abatements.

Corporate Income Tax Rebates

Eligible businesses can receive rebates of up to 75% on corporate income taxes for up to 20 years.

Other Tax Abatements

Rebates or abatements on other taxes such as property tax, dividend tax, and Gross Receipts Tax may be available.

Eligibility for Qualifying Certificates

Qualifying Certificates are granted based on a business's contribution to Guam's economy. Priority sectors include tourism, technology and innovation, healthcare, financial services, agriculture, and other targeted industries as periodically determined by GEDA.

Additional Incentives

There are also programs that may exist to subsidize wages for hiring Guam residents in certain sectors. Specific geographic areas may be designated as Guam Economic Development Zones (GEDZs), offering additional tax incentives and benefits.

How to Apply

Businesses interested in obtaining tax incentives must submit an application to the Guam Economic Development Authority (GEDA).