U.S. Virgin Islands Economic Development Companies

The U.S. Virgin Islands are a U.S. Territory. It offers a unique legal environment and tax breaks not found within the continental U.S. for certain businesses.

In order to encourage economic growth, the government of the U.S. Virgin Islands has created a program for economic development companies. If the company meets certain investment requirements and hires local employees, then for either ten or fifteen years, that company can operate within the U.S. Virgin Islands virtually tax free.

Companies qualifying for benefits through the USVI Economic Development Commission (EDC) receive reductions or exemptions from business taxes. The initial benefits run for 10 years on St. Thomas, St. John and the eastern half of St. Croix and for 15 years on the western half of St. Croix. The benefits may also be renewed.

To qualify, the companies must invest at least $100,000.00 (not including inventory) and offer full-time employment for at least 10 USVI residents. Small, locally-owned manufacturers of import substitutes or tourist souvenirs may receive EDC benefits for up to five years if they invest $20,000.00 and have two employees.

Some of the EDC incentives include the following:

• 90% reduction in local income tax payments on income from the EDC business, plus qualifying passive income.
• A 90% reduction in local income tax on corporate dividends, S corporation distributions or partnership distributions paid to qualifying USVI residents.
• A reduction in the customs duty rate form the standard 6% to 1% for the value of raw materials and component parts imported from outside the US.
• A full exemption from excise tax payments on raw materials and parts.
• A full exemption from property taxes and the gross receipts tax.
• A reduction in the tax rate on company dividends from 10% to 4%, with an additional 2% if at least half of the dividends are reinvested in eligible USVI activities for at least five years.
• An exemption from the withholding tax on interest.
• Availability of rental space in the St. Thomas and St. Croix Industrial Parks.
• A 100% excise tax exemption for building materials, machinery, equipment and supplies in building or expanding the physical plant.

The types of businesses eligible to receive these benefits include:

• Tourism-related facilities, such as hotels and guest houses, transportation services and selected recreation facilities.
• Goods-producing businesses, such as agriculture, mariculture, manufacturing and utilities.

Businesses that provide services to customers outside the USVI such as:

• Assembly, bottling and/or export packing operations
• Commercial and graphic art services.
• Computer service centers.
• Dental Laboratories.
• Economic, scientific or management consulting services.
• Exempt insurance management companies (Captive Insurance)
• International commercial distribution and trading services.
• International public relations services.
• Mail order firms.
• News syndicates.
• Optical and opthalmological laboratories.
• Photographic laboratories, including film processing.
• Prefabricated houses.
• Processing, editing and dubbing of cinematographic films.
• Production of engineering and architectural blueprint and plans for construction projects outside the USVI.
• Public auditing.
• Publicity firms.
• Repair and maintenance services for maritime vessels and aircraft.
• Repair services for electrical and electronic equipment and watches.
• Repair services for machinery and heavy equipment in uses including agriculture, industry, construction, mining and transportation.
• Other industries including Marine, Telecommunication, Health Care Physician Corporations, Insurance Companies and Recreation Facilities.

In addition, the Economic Development Commission may grant benefits to other businesses that the Commission deems to be offering economic benefits to the residents of the USVI.

This firm is able to answer any further questions regarding this program and is able provide the services necessary to establish an economic development company.