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
Applicability of the net investment income tax Finally, Section 1411 of the Code imposes a Medi - care contribution on unearned income, and specifi - cally imposes a tax equal to 3.8% of an individual’s net investment income for a taxable year. The Treasury Regulations promulgated under Section 1411 of the Code provide that bona fide residents of US territories are subject to the tax only if they have a US income tax filing requirement. However, bona fide residents of the USVI have no income tax obligation (or related return filing requirement) with the USA, provided that they properly report income and pay income tax to the BIR. Therefore, the tax imposed by Section 1411 does not apply to bona fide residents of the USVI.
more than 90 days in the USA each year or by not having a significant connection to the USA at any time during the year (which is usually satisfied by not hav - ing a home, voter’s registration, or spouse or minor child located in the USA). The establishment of a “closer connection” to the USVI involves such factors as having an individual’s main home in the USVI, filing returns in the USVI as a USVI resident, obtaining a USVI driver’s licence, registering to vote and voting in the USVI, having a USVI bank account, etc, although no single factor is determinative. A “tax home” is the location of an indi - vidual’s principal place of business. In most cases, the individual must be a bona fide resi - dent of the USVI for the entire year to get benefits on their income from a benefited business, although there is a “year of move” rule permitting individuals to be bona fide residents if they move to the USVI in the first half of a year and remain USVI residents for the next three years, among other requirements.
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