SENATE ENERGY COMMITTEE TO MOVE ON H.R. 309,

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CONGRESSMAN ROBERT A. UNDERWOOD Delegate from Guam U.S. House of Representatives Washington, D.C.

NEWS RELEASE January 21, 2002

THE GUAM FOREIGN INVESTMENT EQUITY ACT

Congressman Robert A. Underwood today said that Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) plans to take action on H.R. 309, the Guam Foreign Investment Equity Act, at the Committee's next business meeting.

"We have received a firm commitment from the Chairman of the Committee to mark it up at their first opportunity and this is really excellent news," the Congressman said, adding that the opportunity may come as soon as the next two to three weeks. "After they mark it up, it is going to the floor, and since it is not seen as a controversial bill, passage is likely to occur in a relatively short time."

The Guam Foreign Investment Equity Act, which passed the House in May and was taken up in a hearing by the Senate Energy and Natural Resources Committee in July, provides for Guam to be treated the same as the States for purposes of taxing foreign investment.

The foreign investment tax rate on Guam is set by the Organic Act at 30 percent, while treaty-negotiated rates on foreign investment in the U.S. are much lower.

"The higher tax rate is a major disincentive at this particular time," the Congressman said. "In earlier times it wasn't a disincentive because our economy was going good and we had QC's (Qualifying Certificates) and other ways of reducing the tax burden on foreign investment, but that's no longer the case."

Enactment of H.R. 309 would allow the tax rate for Guam to vary, depending on the tax treaties the United States enters into with foreign countries.

"For some countries, like the United Kingdom, the rate is zero," the Congressman said. "Since almost all of our development is created by foreign investment, the possibilities for Guam multiply, as we think of the various tax treaties in our region and around the world."

Congressman Underwood added that some 15 foreign investment firms are keeping track of the legislation and are anticipating its enactment.

"I've also talked with the people who are currently negotiating the tax treaty with Japan," the Congressman said. "Even if something doesn't break for this legislation, they are fully aware of our concerns."

For additional information, contact: Cathy Gault at 671-477-4272

Washington office: 2418 Rayburn Office Building Washington, D.C. 20515 Tel: 202-225-1188 Fax: 202-226-0341 Email: guamtodc@mail.house.gov 

Guam office: 120 Fr. Duenas Ave., Ste 107 Hagatna, GU 96932 Tel: 671-477-4272 Fax: 671-477-2587 

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