US VIRGIN ISLANDS Trends and Developments Contributed by: Marjorie “Jorie” Roberts, Sean Foster, Alexander Polinsky and Duncan J. J. Kessler, Marjorie Rawls Roberts P.C.
plies and equipment, fees for testing or continuing education, materials, testing fees, dual enrollment fees and tutoring costs. Exemption From Net Investment Income Tax Lastly, all bona fide residents of the USVI are exempt from the Net Investment Income Tax (NIIT) otherwise imposed at a rate of 3.8%. Treasury Regulation Sec - tion 1.1411-2 (a)(2)(vi)(A) states plainly and unequivo - cally that: “An individual who is a bona fide resident of a United States territory is subject to the tax imposed by Sec - tion 1411 (a)(1) [of the NIIT] only if the individual is required to file an income tax return with the United States upon application of Section 931, 932, 933 or 935 and the regulations thereunder.”
In turn, Section 932 (c) of the Code provides that bona fide residents of the USVI are not “required to file an income tax return with the United States” but rather “shall file an income tax return... with the Virgin Islands”. See the Code, Section 932 (c)(2). Accord - ingly, the NIIT does not apply to bona fide residents of the USVI.
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