US VIRGIN ISLANDS Trends and Developments Contributed by: Marjorie “Jorie” Roberts, Sean Foster, Alexander Polinsky and Duncan J. J. Kessler, Marjorie Rawls Roberts PC
In conclusion, a USVI exempt company offers inves - tors many benefits of establishing a company under the US flag to hold assets and to engage in business around the world. Other benefits from OBBBA to USVI residents OBBBA includes a number of provisions that benefit high net wealth individual taxpayers, and the provi - sions are automatically “mirrored” to the USVI and bona fide residents of the USVI. These include the following: • a permanent increase in the estate and gift tax exemption to USD15 million per person; • a more favourable capital gains structure for Quali - fied Small Business Stock; • a temporary boost to the state and local taxes deduction cap to USD40,000 for married filing jointly and USD20,000 for married filing separately with a minimum deduction of USD10,000; and • expansion of the definition of qualified education expenses on qualified postsecondary credentialling expenses, to include tuition, fees, books, supplies and equipment as well as fees for testing or con - tinuing education, books, materials, testing fees, dual enrollment fees, and tutoring costs.
Exemption from net investment income tax Finally, 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 section 1411 (a)(1) [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)(2) 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”. Accordingly, the NIIT does not apply to bona fide residents of the USVI.
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