CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Take June 30th Off Your Calendar: Guam Changes Business License Renewal Deadlines

By: Karen Redman, COGENCY GLOBAL INC. on Wed, Jun 28, 2017

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Guam is known as the crossroads of the Pacific (for its equidistant flying time from Australia to China) and as a Pacific communications node (it’s a major hub for submarine cables between the Western U.S., Hawaii, Australia and Asia). And if your company does business there, you know that, historically, June is a busy month because that’s when you have to renew your annual business license.

A Quick Guide to Business Licenses in Guam

Once you receive your Certificate of Formation or Certificate of Authority, you must apply for the relevant business license. All businesses with a Certificate of Authority that are actively doing business must obtain one. This even extends to those that are only doing work on military bases. You can obtain a General Business license at the General Licensing Division of the Department of Revenue and Taxation.[1]

The Old Annual Renewal in June

Historically, it was true to say that general business licenses renewed annually in the month of June, regardless of the date of issuance. Renewal notices were usually mailed out to your mailing address of record, but it was highly recommended that you not wait for it and process the renewal before June 30, when the previous one expired.1

Public Law 33-83 Amends Renewal Deadlines

However, on November 9, 2015, “An Act to Amend Sections 70115, 70116 and 70117 of Chapter 70, Title II, Guam Code, Annotated, Relative to the Issuance of Business Licenses” was signed into law as “Public Law 33-83.”

The legislature found that issuing and renewing business licenses as described above created a major inconvenience for business owners and employees of the Department of Revenue and Taxation. It was therefore the intent of the Act to amend the laws to allow the Department of Revenue and Taxation to renew these licenses based on the issue or renewal date.

Now, all licenses expire one year after the date they were issued or renewed. There will no longer be the rather onerous circumstance where ABC Corp received its first “annual” business license in April only to have to renew it two months later in June. The Act provides that all licenses for companies already in existence prior to its enactment shall be renewed during the month they originally obtained. So for the example above, ABC Corp’s license renewal month would be April.

Renewal Deadlines in Transition

The Act also allows the Department of Revenue and Taxation up to 18 months from the enactment of the law to amend the renewal dates. Since the law was enacted in 2015, that means it is applicable to the 2017 filing year. However, from a practical process perspective, if a company hasn’t already received a notice, there is no way to know the new renewal date until the license is actually renewed and the License Branch data system program assigns the new license renewal month end. There is no data query that can be done in the system prior to the license being renewed.

Prorated Renewal Rates

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Practically, if your initial license date is January, we suggest renewing the business license in June 2017 as you have done in the past.  Since that licenses expires in January, 2018, you would pay a reduced prorated rate. You must then renew your business license anytime in January 2018. A license will be issued for the 2018-2019 renewal period and will expire on January 31 every year thereafter.

What happens if your license expires after June (say September rather than January)? In this event, we suggest you renew in June 2017 as you’ve always done. Since that license will not expire until September 2018, you would pay a higher prorated fee. September 2018/2019 will then be the first full 12 month renewal period.

Keeping track of changing requirements and deadlines for business licenses in foreign countries can be a challenge. Seeking assistance from an experienced service company can help to ensure your company stays in compliance.

 

[1] Nakamura, Keith; White Paper “Guam Registration, Licensing and Taxation Requirements”

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: International Corporate Services