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
Most transactions submitted to CFIUS are approved without issue. However, a notable example of a deni - al is the attempted acquisition of US tech company Sourcefire, Inc. which counted numerous intelligence agencies among its clients, by Israeli tech firm Check Point Software Technologies, Ltd. Upon further scru - tiny by CFIUS, the deal was called off. 7.2 Criteria for National Security Review This is not applicable in the USVI. 7.3 Remedies and Commitments This is not applicable in the USVI. 7.4 National Security Review Enforcement This is not applicable in the USVI. 8. Other Review/Approvals 8.1 Other Regimes The USVI does not have exchange controls on remit - tances of USD to overseas recipients. Corporations and LLCs must file an Annual Report with the Division and pay an annual franchise tax to the Division, set at a statutory minimum of USD300.00 per year. However, for capital-intensive corporations and LLCs, the annual franchise tax can be higher. For corporations (formed as corporations), the fran - chise tax is the greater of USD300 a year or 15 basis points of the entity’s capital used in the USVI trade or business, with an annual cap of USD150,000.00. For LLCs, the franchise tax is similarly the greater of USD300 a year or 15 basis points of the entity’s capital used in the USVI trade or business, without an annual cap. Partnerships are subject to an annual fee of USD150.00. Also, it is important to file Form 8832, Entity Clas - sification Election, for entities formed in the USVI – which file as domestic entities – and entities formed elsewhere – which file in the USVI as foreign entities. 9. Tax 9.1 Taxation of Business Activities
Moreover, a business in the USVI may be subject to, among others, the following taxes: • Form 1120 tax return for USVI corporations or a Form 1120F for foreign corporations, which includes US corporations; • gross receipts tax – filed monthly if USVI source receipts are more than USD225,000.00 annually or filed annually if USVI source receipts are less than USD225,000.00 annually; and • employee taxes – including USVI and federal unemployment insurance, USVI workers’ compen - sation, and federal social security and Medicare tax. In the USVI, it is recommended to hand-file any returns with the BIR and to retain a stamped copy of each filing. 9.2 Withholding Taxes on Dividends, Interest, Etc A non-resident of both the USVI and the United States who is engaged in a trade or business in the USVI must pay tax on the income effectively connected with that USVI trade or business. The person must file a return with and pay tax on that income to the BIR. A non-resident of both the USVI and the United States who is not engaged in a trade or business in the USVI but who has USVI source income is generally subject to a 10 percent withholding tax, which is to be paid to the BIR by the USVI payor of the income. However, if the income is interest on a loan secured by USVI real property with a value equal to or greater than the loan, then no withholding tax is due. Cash or property received as employment compen - sation by a non-resident of the USVI will not be USVI source income under mirrored Code section 861 (a) (3) if: • the compensation is earned while the individual is temporarily present in the USVI; • the taxpayer is not present in the USVI for more than 90 days during the taxable year; • the compensation does not exceed USD3,000.00; and
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