US VIRGIN ISLANDS LAW AND PRACTICE Contributed by: Marjorie Roberts, Sean Foster, Renée Marie André, Lisa Wisehart, David Bornn, Duncan J. J. Kessler and Jessica McKenney, Marjorie Rawls Roberts PC
it cannot enter into its own tax treaties. The USVI is included in certain of the United States’ agreements for the exchange of information relating to taxes. Also, foreign investors in USVI real estate are subject to the Foreign Investment in Real Property Tax Act of 1980, which is codified in sections 897 and 1445 of the Internal Revenue Code of 1986, as amended, as applicable to the USVI (“Code”). Regarding foreign investment in the USVI, there is no separate legislation or other rules limiting it. In fact, the USVI has enacted a number of economic incen - tive programs to attract investment in the USVI, and these programs specifically encourage investment by US residents and foreign investors. Examples of these incentive programs include the Economic Development Commission (“EDC”) and the Univer - sity of the Virgin Islands Research and Technology Park (“RTPark”) programs. However, the USVI has local laws that may apply to foreign direct investments (“FDI”), as discussed further in this article. On December 8, 1986, the USVI legislature enacted the exempt companies’ legislation, which subse - quently went into effect on February 24, 1987, upon the signing of the Tax Implementation Agreement Between the United States of America and the US Virgin Islands. On August 17, 1993, then-USVI Gov - ernor Alexander Farrelly signed into law the Exempt Company Amendments Act of 1993, which made significant changes to the USVI exempt companies’ legislation to enhance the use of exempt companies by foreign investors. 2. Recent Developments and Market Trends 2.1 Current Economic, Political and Business Climate The USVI has been actively promoting FDI in the ter - ritory. For example, in May 2023, the Governor and Lieutenant Governor of the USVI, along with repre - sentatives from the territory’s tax incentive programs, including the Virgin Islands Economic Development Authority (“VIEDA”) and RTPark, represented the USVI at the SelectUSA Investment Summit. Hosted
by the US Department of Commerce, this summit is recognised as the highest-profile event in the United States dedicated to promoting FDI. During the event, USVI representatives participated in panels and dis - cussions, and VIEDA served as a platinum sponsor. The Governor of the USVI, Albert Bryan, is currently serving his second term. Governors in the USVI may run for a third term, but not consecutively. The USVI also hosts a Tech Beach Retreat (“TBR”) Summit through TBR’s partnership with RTPark, which is also hosted in Jamaica and Miami, as well as other locales. This retreat program gathers entrepreneurs, C-suite executives from major tech companies and government officials from around the Caribbean and seeks to promote locales like the USVI as a flourishing hub for investment in the technology sector. The USVI utilises the same range of business struc - tures as on the mainland United States, including Lim - ited Liability Corporations (“LLCs”), Limited Liability Partnerships (“LLPs”), C-Corps and S-Corps, and Professional Corporations. When choosing a busi - ness structure, it is important to consider not only the intended activities of the business – such as whether it will operate as a holding company or conduct busi - ness under its own name – but also whether the struc - ture will seek benefits under one of the USVI’s tax incentive programs. Many of the statutes relating to corporate law in the USVI are based on those enacted in the state of Delaware. 3.2 Regulation of Domestic M&A Transactions Antitrust and Competition Law in the USVI The Virgin Islands Antimonopoly Law (11 V.I.C. §§ 1501-1518) forbids agreements in restraint of trade between competitors, as discussed further in this arti - cle. Forbidden agreements include agreements to fix prices, fix levels of production or distribution and allo - cate territories and customers. The law also forbids the use of monopoly power to exclude competition. The law is construed similarly to federal antitrust law. Moreover, Federal antitrust laws apply in the USVI. 3. Mergers and Acquisitions 3.1 Transaction Structures
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