Guam LLC Taxes
The first thing to know about Guam LLC taxes is that Guam, a US territory, is a separate taxing jurisdiction from the United States. Guam tax law mirrors US federal tax law, and the Guam corporate tax rate is the same as the US federal corporate tax: 21%. Full-time residents of Guam file taxes with the Government of Guam, with the exception is self-employment taxes, which are filed with the US.
Guam LLCs are taxed as pass-through entities by default, meaning the LLC does not pay corporate income tax. Instead, LLC members pay individual taxes on their share of the profits. Guam also has a Business Privilege Tax, which is 5% of gross sales. Below, we offer a guide to understanding Guam LLC taxes.
In this article, we’ll cover:
How Are Guam LLCs Taxed?
Since Guam is a separate tax jurisdiction, if your LLC only receives income from Guam sources and its members meet the criteria to be bona fide residents of Guam, you’ll file your taxes with Guam and not the US. However, since Guam does not have a separate Medicare and social security system, LLC members who are full-time residents of Guam still need to pay the 15.3% self-employment tax to the US by filing Form 1040-SS.
LLC members who aren’t full-time residents of Guam or get income from both Guam and other sources file their individual taxes with the US, not with Guam.
- Single-member LLC—Form 1040 or Guam Form 1040 (usually Schedule C, but some SMLLCs file C-EZ, E, or F)
- Multi-member LLC—Form 1065
If you are not a full-time Guam resident, you make at least $50,000 a year in adjusted gross income (AGI), and at least $50,000 of your income is from Guam sources, you may need to file IRS Form 5074.
Note: Filing business taxes in multiple jurisdictions is pretty complicated if you’re not a tax whiz, so it’s a good idea to hire a CPA to make sure you meet all your tax obligations.
Guam LLCs taxed as S-corp
Guam LLCs that elect S-corp status are still considered “pass-through entities,” so they don’t pay corporate income tax. But unlike default LLCs, S-corp LLCs can make distributions to members that aren’t subject to the 15.3% self-employment tax. However, S-corp LLCs are also required to pay a reasonable salary (in line with industry norms) to members who provide a service to the business, which is subject to self-employment tax. Long story short, becoming an S-corp doesn’t automatically save you 15.3% on taxes. It’s a good idea to consult a CPA and find out electing S-corp status makes sense for your LLC.
LLCs taxed as C-corp
LLCs can also opt for C-corp tax status, which is the default tax status for corporations. C-corps are subject to “double taxation,” meaning the business must pay corporate income tax and shareholders pay taxes on their distributions. The Guam corporate income tax rate is 21%. Before filing for C-corp status, seek advice from an accountant to make sure this makes financial sense for your LLC.
Guam Income Tax
Guam’s income tax rates mirror the US federal income tax rates. For LLCs with default tax status, LLC members will need to pay individual income tax on their share of the profits at a rate ranging from 10% to 37%, based on tax bracket:
|Tax Rate||Tax Bracket for Single Filers||Tax Bracket for Joint Filers|
|10%||$0 to $10,275||$0 to $20,550|
|12%||$10,276 to $41,775||$20,551 to $83,550|
|22%||$41,776 to $89,075||$83,551 to $178,150|
|24%||$89,076 to $170,050||$178,151 to $340,100|
|32%||$170,051 to $215,950||$340,101 to $431,900|
|35%||$215,951 to $539,900||$431,901 to $647,850|
|37%||$539,901 or more||$647,851 or more|
Guam LLCs taxed as C-corps need to pay the Guam corporate income tax of 21%.
For more information on Guam taxes, visit the Guam Department of Revenue and Taxation.
Guam Business Privilege Tax
Guam LLCs also need to pay Guam’s 5% business privilege tax, called the Gross Receipts Tax (GRT), which must be filed on a monthly basis. You can file your GRT tax return online, by mail, or in person. In order to file GRT returns, you’ll need to know your GRT account number, which will be printed at the top of your business license.
Sales and Use Tax
If you sell taxable goods or services to customers, you’ll need to register for a GuamTax.com business account and collect Guam’s 2% sales tax. However, the following services are exempt from Guam sales tax:
- Banking and lending services
- Foreign currency services
- Insurance services
Other Taxes in Guam
Here are some other taxes that Guam LLC owners should be aware of.
Guam Employer Taxes
Guam employers need to purchase workers’ compensation insurance for their employees. The only exception is for employers of domestic workers, who may but aren’t required to purchase workers’ compensation insurance for their employees. The rate for workers’ compensation insurance will vary based on your claims history and the risk level of your employees’ work.
Guam does not have an unemployment insurance (UI) program, so employers will not have to pay UI tax to Guam. However, some employers on Guam may need to pay the Federal Unemployment Tax Act (FUTA) tax.
For more information on Guam employer taxes, check out IRS Publication 80.
Certain industries in Guam need to pay additional taxes. Here are some industry-specific taxes you may need to pay to the Government of Guam:
- Gasoline tax
- Hotel occupancy tax
- Liquor tax
- Real property tax
- Tax on recreational facilities
- Tax on amusement devices, such as slot machines
- Tobacco tax
Do foreign LLCs in Guam need to pay Guam taxes?
Yes! Foreign LLCs that do business in Guam need to pay Guam taxes, including Guam’s Gross Receipts Tax. Foreign LLCs will also need to collect Guam sales tax on products and services sold in Guam. However, foreign LLCs will pay income tax to the US, rather than to Guam.