Both Guam and the Northern Mariana Islands leaderships have been occupied with reviewing legislation, though with very different outcomes.
New tax heading for NMI law
Northern Mariana Islands House Bill No. 23-20 will impose “a 3% surtax on gross revenues derived from non-residential construction projects that cost three hundred fifty thousand dollars or more,” if enacted into law.
The bill was filed by Rep. Edmund S. Villagomez of Saipan’s Precinct 3, who is the speaker of the House, together with Representative Blas Jonathan “BJ” T. Attao. The bill will be heard in the House of 23rd NMI Legislature on Oct. 25, which will meet from 10 a.m.
According to the speaker’s office, the bill was originally passed by both houses of the NMI Legislature, and then further amended into the current bill. Gov. Arnold I. Palacios is expected to veto the previous bill before Nov. 4, and await the current bill, assuming the current bill passes both houses of the NMI legislature.
The bill – which in its current form will take effect from Jan. 1, 2025 – specifically says that sub-contractors are not required to pay the tax.
The bill also says that “construction contractors subject to this tax are entitled to a non-refundable credit against the tax imposed on Commonwealth Source income under Subtitle A of the Northern Marianas Territorial Income Tax.” However, the bill says, “No such credit shall be allowed for any amount deducted in determining taxable income under the NMTIT as shown on the taxpayer’s return.”
Mark J. Mamczarz, vice president of finance for Black Construction Corp. and Black Micro Corp. told the Journal that contractors do have a remedy for such increased costs of doing business.
“Normally, we just pass it on to the owner,” he said.
Without the current legislation’s effect, Mamczarz said comparing Guam and the Northern Mariana Islands, “The tax burdens currently are equal, without the multiplying effect.”
He also said that an additional tax burden is not good news. “As an investor, it would be discouraging.”
Black Microl Corp. currently holds two contracts for the divert airfield in Tinian.
In related news, the NMI’s two-day discussions on Section 902 of the Covenant began on Oct. 23, according to the Office of the Speaker. Carmen G. Cantor, assistant secretary of the U.S. Department of the Interior for insular affairs is representing the U.S. government.
Cable landings flowing into Guam
AT&T will not get another five years on its lease of property near Tanguisson for a landing station for its undersea cable without legislation.
Gov. Lourdes A. Leon Guerrero vetoed Bill 323-37, saying that property values have changed since AT&T’s lease was secured in 2019.
According to Journal files, a law passed in August 2021 required GTA to pay a landing fee of $100,000 per cable, plus at least $100,000 in annual lease payments per cable. In 2020, GTA and the Chamorro Land Trust Commission were discussing approval of an annual $18,000 lease, with no limit on the number of cables to be landed.
The 2021 law required GTA’s landing fees and lease payments for the Tamuning cables to be deposited to the Land Trust’s survey and infrastructure fund.
GTA broke ground in 2022 on a two-story 31,000 square foot facility due for completion this year. will house up to six subsea cables and a data center, according to Journal files. The facility is on 2.5 acres of land leased from the Perez family in Tamuning on Gov. Carlos Camacho Road.
Hexa Capital Consultancy PLT, owner of the Malaysia-U.S. cable based in Malaysia, appointed GTA in Guam as its U.S. Landing Party for the MYUS cable system, according to an Oct. 23 announcement from the two companies.
The MYUS cable is planned with a ready for service date of mid-2028. MYUS will connect Malaysia and the U.S. directly for the first time with high capacity fiberoptic connectivity, increasing access to reliable and affordable digital services across Southeast Asia. The cable backbone will extend between the Malaysian Peninsula near Sedili to Guam at the new Alupang Cable Landing Station and Datacenter and then directly onward to the Alaska Communications cable landing station in Florence, Ore. Along the path, MYUS will also connect Batam, Jakarta and Balikpapan in Indonesia, and Davao in the Philippines, according to the release.
Leon Guerrero did sign into law Substitute Bill No. 334-37 as Public Law No. 37-131, which authorizes the Land Trust to issue new leases to eligible beneficiaries whose leases were issued in a manner contrary to law, if the lessee is otherwise in full compliance. The bill also requires other lessees to come into compliance within five years.
The governor also signed Bill 247-37 into law as Public Law No. 37-132. That legislation awards leases to people who were issued a land use permit, rather than a lease.
In related GovGuam news, The Office of Public Accountability released Oct. 23 a compliance audit of Government of Guam entities’ compliance with mandated Citizen-Centric Reporting for fiscal 2021 and 2022.
The compliance audit found that as of Oct. 16:
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61 of 67 entities (or 91 %) issued their fiscal 2021 CCRs. Of the 61, 42 entities fully complied, 19 entities were partially compliant, and six were non-compliant.
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59 of 67 entities (or 88 %) issued their fiscal 2022 CCRs. Of the 59, 35 fully complied, 24 partially complied, and eight were non-compliant. mbj