Guam governor Eddie Calvo has vetoed a bill that granted tax breaks to Core Tech Captive Insurance Corporation (CTCIC), the captive insurer of Core Tech International.
Bill 363, which was passed by the Guam legislature on 17 December 2018, approved the qualifying certificate (QC) negotiated by CTCIC and the Guam Economic Development Authority (GEDA).
The QC programme, which has existed since the 1960s, is an economic incentive to encourage investment in activities that strengthen the island’s economy.
The programme offers significant tax breaks, including a 75 percent rebate of corporate income tax for up to 20 years.
In the case of CTCIC and Bill 363, the terms of the QC were altered by the Legislature to increase the income tax rebate to 100 percent and to add an additional abatement of 100 percent of gross receipts tax.
Governor Calvo said the “illegal bill” and the 2019 Budget Law from where it claims to derive its authority “are inorganic and void ab initio”.
Calvo added: “The Legislature has impudently taken it upon itself to change the terms of the QC contract that was negotiated by GEDA and Core Tech and approved as to form by the Attorney General.”
“The Legislature is without power to approve, disapprove, or change the terms of a contract entered into by the executive branch.”
“Bill 363 and its enabling section in P.L. 34-116:XIII:8 (the 2019 Budget Law) represent an inorganic legislative encroachment on an exclusively executive power.”
“Inorganic laws such as Bill 363 and P.L. 34-116:XIII:8 are void ab initio, or null from the beginning and without any legal effect.”
The Core Tech QC application saga has been ongoing for multiple years, CTCIC received its certificate of authority to offer captive insurance services on 1 July 2016 and had its QC recommended by GEDA in January 2018.