Guam § 58128 - One Hundred Percent Rebate on Certain Trust Income.

§ 58128. One Hundred Percent Rebate on Certain Trust Income.

(a) One Hundred Percent Rebate on Certain Trust Income. A rebate of one hundred percent (100%) of

all income tax paid to the government of Guam by a Guam-based trust on all its earnings from either inside

or outside of Guam, including all income derived from investing funds on Guam or elsewhere, may be

issued for a period not to exceed twenty (20) consecutive years from the effective date of a Special

Qualifying Certificate therefor.

For purposes of this § 58128.6, a “Guam-based trust” means:

(1) an arrangement created by will or by an inter vivos declaration whereby a trustee or trustees

take title to property to protect or conserve the same for a beneficiary or beneficiaries of the trust under

probate or chancery court rules;

(2) Guam is the principal place of administration of the trust, and for trusts with United States

fiduciaries, a choice of laws election can be made for primary jurisdiction to be under the Federal

District Court of the elected state;

(3) a minimum of Ten Thousand Dollars ($10,000.00) in U.S. currency remains in deposit at a

local financial institution for the duration of the trust; and

(4) the trust property is not employed, directly or as shareholder, in a business for the settlor or

the beneficiary, and for the purposes of this Subsection, “business” has the same meaning as “engaging

in or carrying on a business” as in the Business License Law in 11 GCA § 70103(c) and includes only

businesses which are required to be licensed, or are excepted from obtaining a license pursuant to the

policy and provisions of 11 GCA §§ 70102 and 70130. A “Guam-based trust” shall be defined as a

person under Treasury Regulation §301.7701-7(a) and notwithstanding the definition contained in

Treasury Regulation §301.7701-7(c)(3)(ii), a Guam-based trust shall be considered a United States

Domestic Trust under the provisions of §301.7701(c)(4)(ii)(D). Such Special Qualifying Certificates

for Guam-based trusts may be renewed for additional periods of twenty (20) years at the conclusion

of the first or later periods so long as the trust remains in good standing under the laws of Guam and

under the rules and regulations of the Authority.

(b) Rebates on Payments to Beneficiaries of Guam-Based Trusts. A rebate of one hundred percent

(100%) of the income tax withheld from the beneficiaries of a Guam-based trust on the payments or

distributions made to such beneficiaries from such a Guam-based trust may be issued for a period not to

exceed twenty (20) consecutive years from the effective date of the Special Qualifying Certificate;

provided, that:

(1) the Guam-based trust making the payments or distributions is the holder of a Special

Qualifying Certificate;

(2) the payments or distributions are made from the property of such Guam-based trust, which

payments or distributions were received, on a cash basis, during the original or an extended period of

the Special Qualifying Certificate; and

(3) the payments or distributions were subject to a withholding tax thereon pursuant to those

provisions of the Guam Income Tax Law requiring the withholding as income tax thereon of a fixed

percentage of any fixed or determinable annual or periodical gains, profits or income received by non-

residents of Guam.

Such Special Qualifying Certificates of Guam-based trusts may be renewed for additional periods of twenty

(20) years at the conclusion of the first or later periods, so long as the Guam-based trust that is the holder

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of a Special Qualifying Certificate and is in good standing under the laws of Guam and under the rules and

regulations of the Authority.

(c) A Guam-based Trust desiring to apply for a Special Qualifying Certificate shall make application

by filing a copy of the trust instrument and a completed application in the form as required by the

corporation (GEDA). The corporation, upon ascertaining that the material furnished by the applicant is in

proper order, and that the fees established in the Corporation’s Rules and Regulations having been paid,

shall thereupon promptly forward its recommendation for issuance of the Special Qualifying Certificate to

I Maga’hågan/Maga’låhen Guåhan who shall approve the application.

(d) A true copy of the Special Qualifying Certificate shall be attached to each tax return of the Guam-

based Trust, and the amount of tax due prior to the rebate shall be deposited with the government at the

time of filing of each income tax return.

(e) Taxes deposited by the Guam-based Trust shall not be placed in the General Fund or commingled

with other funds, but shall be deposited by the Director of the Revenue and Taxation in a special purpose

trust accounts in one (1) or more FDIC insured banks with offices within Guam, and shall be withdrawn

from such accounts only for the purpose of making rebates as provided herein.

(f) The provisions of 12 GCA Chapter 58 shall not apply to any Guam-based Trust applying for a

Special Qualifying Certificate, specifically §§ 58112, 58116, 58119, 58123, 58124 and 58125.

(g) It is the intent of I Liheslaturan Guåhan that no portion of the rebates of income tax made under

this Section shall be subject to income taxation.