Economic Development Commission: Tax Incentive Program for Businesses

In addition to being an ideal place to live, the U.S. Virgin Islands - America's Business Paradise - is also a prime location for you to do business, save on business taxes and maximize your company's profits.

Economic Development Commission

The U.S. Virgin Islands economic development program is administered by the Virgin Islands Economic Development Commission (VIEDC), an entity under the U.S. Virgin Islands Economic Development Authority. Its basic purpose is to promote growth, development and diversification of the U.S. Virgin Islands economy.

The VIEDC is empowered to encourage and assist in the creation, development and expansion of businesses in the U.S. Virgin Islands. It administers a tax incentive program established by local laws for small to large businesses.

Tax Incentives and the application process

The U.S. Virgin Islands economic development program provides tax exemption incentives for gross receipts tax, excise tax, property tax, and custom duties and also a possible 90% income tax exemption. USVI resident shareholders of companies which have benefits are also entitled to 90% exemptions on withholding and interest.

A seven-member Board of Directors reviews all applications for economic development benefits. Upon receipt of a completed application, the VIEDC holds a public hearing. Thereafter, a decision meeting is held for a determination on the approval or denial of the application by the EDC Board. Applications that are recommended to the Governor of the U.S. Virgin Islands by the VIEDC Board, following the decision meeting, are subject to the Governor's approval. A certificate (contract) that specifies the tax benefits and time periods for a business to receive such benefits is executed following the Governor's approval.

The VIEDC is headed by the chief executive officer of the VIEDA with support staff at the VIEDC offices in St. Thomas and St. Croix. Applications for tax benefits are made through the Director of Applications.

Impact of the EDC Program on the USVI economy

From fiscal year 2007 to 2013, active participating companies employing 2,254 persons were receiving tax benefits from the EDC program as they represented a broad range of industries including hotels, guest houses, manufacturing and assembly, major tourist attractions, transportation-related, and export service businesses. The manufacturing sector is represented by high-value manufacturing, construction materials and a variety of other products.

Qualifications

Now you can join many businesses from across several industries that are participating in the economic development program of the USVI. In order to qualify, a business must invest a minimum of $100,000 exclusive of inventory in an eligible business and employ at least 10 employees on a full-time basis. Financial service businesses must employ at least five (5) full-time employees. Eighty percent of all employees must be residents of the Virgin Islands. Initial tax benefits are currently granted by the USVI Economic Development Commission for 20 years for businesses operating in St. Thomas and St. John or 30 years for businesses operating in St. Croix. Businesses that remain in compliance may be renewed for a one-time 10-year period.

Benefits are not usually granted for businesses that serve only the local market. Those operations that typically enjoy these benefits are hotels and service businesses. USVI resident shareholders of companies which have benefits are also entitled to 90% income tax exemptions.

To learn about other incentives, the economic development parks in the USVI, and other VIEDA entities with programs and services for local businesses, you may visit http://www.usvieda.org/grow-business/edc-tax-incentives for more information.

Note: This updated information for this section has been provided by the Economic Development Commission as of July 2015.

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