Guam Institutes Incentives To Build 1,600 New Hotel Rooms

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Developers encouraged through various tax saving measures

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, Jan. 1, 2015) – A new island law enacted yesterday creates a program that offers tax incentives to hotel developers. The Legislation is part of a push to build 1,600 new hotel rooms on Guam by 2020.

In an effort to keep up with tourism growth projected by the Guam Visitors Bureau, Gov. Eddie Calvo signed Bill 416-32, which sets up a tax incentive program called the "Special Hotel Qualifying Certificate." The certificate would be awarded to companies that construct new hotels on Guam.

"There's a bunch of investors that look toward the signing of this legislation and looking forward to taking advantage of this QC," Calvo said during the bill signing ceremony at Adelup.

Sen. Dennis Rodriguez, D-Dededo, who authored the bill, said it also would extend the incentive program to existing hotels on island that are planning to expand facilities. He added that this new law would serve as a framework for other industries in the future.

According to the bill, GVB's Vision 2020 plan set the goal of developing 1,600 additional hotel rooms before 2020. However, in order to meet that deadline, tax incentives needed to be offered so Guam could compete with other tourism markets.

A menu of choices

Under the newly enacted law, the Guam Economic Development Authority would be in charge of approving and issuing the QCs to prospective hotel developers.

"It was absolutely necessary to provide an incentive," said Mana Silva Taijeron, GEDA deputy administrator.

Companies that are awarded the QC will receive a tax abatement, exemption and rebate equal to 10 percent of their total construction cost.

The developer will then have the option of applying their 10-percent tax abatement, exemption and rebate to one of four tax options.

Those taxes include the 75-percent Income tax rebate for 20 years, the 50-percent business privilege tax credits for 20 years and the 100-percent real property tax abatement for 10 years. The fourth tax option is the 100-percent exemption from the "use" tax on furnishings and equipment claimed within the first year of a hotel's operation.

The new law also includes a sunset provision, stating that the QCs will remain in effect until one of three events occur: five years pass, the 1,600 rooms are completed, or the China Visa Waiver or China Visa Parole is declared.

GEDA also is required to submit a policy proposal regarding the stimulation of legitimate investments to the Legislature within 60 days from the bill's enactment.

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