US VIRGIN ISLANDS Trends and Developments Contributed by: Marjorie (Jorie) Roberts, Sean E. Foster, David Bornn, Lisa M. Wisehart and Duncan J.J. Kessler, Marjorie Rawls Roberts PC
South Shore Trade Zone Act In 2020, the USVI legislature enacted the Virgin Islands South Shore Trade Zone (SSTZ) Act, designating 3,000 acres on the south shore of St. Croix, which fea - tures a deep-water port and is a short distance from the Henry E. Rohlsen Airport, as an Enterprise Zone. The SSTZ Act entitles approved applicants to a credit equal to 90% of the otherwise applicable income tax, in addition to 100% exemption from the gross receipts tax, property tax, excise taxes and customs duties for up to 20 years. The goal of the SSTZ, administered by the EDA, is to designate an area that eliminates traditional barri - ers to commercial trade and investment in support of light manufacturing, trans-shipment, the agricultural sector, micro-manufacturing, industrial development and the territory’s green and blue economy sectors. Among other requirements, an applicant in a qualifying business must make a minimum capital investment of USD100,000 (exclusive of inventory) and employ a minimum of ten full-time employees and one paid apprentice. Additionally, applicants must comply with all local and federal laws and notify the DOL of any job openings or subcontracting openings. On 22 May 2026, the 36th Legislature of the USVI held an Eco - nomic Development Program Summit with a particular focus on highlighting opportunities in the SSTZ. Opportunity Zones – federal benefits for USVI investments Several US programmes are also available for inves - tors in the USVI. The Tax Cuts and Jobs Act, passed in December 2017, established the Opportunity Zone Program, which provides immediate and long- term tax advantages to US investors in Opportu - nity Zones. Investors can defer capital gains taxes on earnings from many types of investments up to 2027, can reduce taxes on the capital gain invested into an Opportunity Fund by 10% or 15%, depending on whether the qualifying investment is held for five years or seven years, and can gain permanent exclu - sion from capital gains taxation on Opportunity Fund investments held for at least ten years. The USVI has 14 designated Opportunity Zones. Other tax credits are also available in the USVI, such as the 20% income tax credit for preserving historic
properties and tax credits for owners of certain newly constructed or substantially rehabilitated low-income rental housing projects. Choice of entity The USVI provides many options when choosing to form a legal entity within the jurisdiction, including corporations, limited liability companies and partner - ships, such as:
• general partnerships; • limited partnerships;
• limited liability limited partnerships; • limited liability partnerships; and • trusts.
The USVI has adopted the Uniform Limited Liability Company Act, and the formation and governance of an LLC is similar to that imposed in the 50 states and the District of Columbia. Except for general partnerships (which are formed by the agreement of the partners) and trusts, all enti - ties are formed through filings with the Office of the Lieutenant Governor of the USVI, Division of Corpora - tions and Trademarks. Federal law applies in the USVI, including the Securities Act of 1933 and the Securi - ties Exchange Act of 1934. In addition, the USVI has adopted the Uniform Securities Act for territorial-level securities regulations. The USVI imposes an annual franchise tax on LLCs and corporations, based on the capital used in the USVI trade or business, with the minimum franchise tax being USD300 annually. Part - nerships pay a set annual fee of USD150. Residency requirements Many USVI economic incentives and related pro - grammes provide personal tax benefits for bona fide USVI residents on their allocations or dividends. To be a bona fide USVI resident, a person must meet one of five alternative physical presence tests each year, have a closer connection to the USVI than to any other location, and have a USVI tax home. The most-used “physical presence” test involves being in the USVI for all or part of 183 days in a given year; however, individuals who travel frequently can satisfy the physical presence test by spending no
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