US VIRGIN ISLANDS TRENDS AND DEVELOPMENTS Contributed by: Marjorie Roberts (“Jorie”), Sean Foster, Renée Marie André, Lisa Wisehart, David Bornn, Duncan J. J. Kessler and Jessica McKenney, Marjorie Rawls Roberts PC (St Thomas - HQ)
goods. In addition, a beneficiary’s customs duties are reduced from 6% to 1% on raw materials and com - ponent parts imported from outside the USA. No local customs duties are imposed on US-made products. EDC beneficiaries must generally make a minimum capital investment of USD100,000 (exclusive of inven - tory) and must meet certain minimum employment requirements. Typically, an EDC beneficiary must employ at least ten full-time employees, but “desig - nated service businesses” (which serve clients locat - ed outside the USVI) are only required to employ five full-time employees, and the EDA has the authority to lower the employee minimum or to permit a business to have several years to meet the employee minimum upon a showing of good cause. At least 80% of the EDC beneficiary’s employees must be USVI residents, unless a waiver is granted. EDC beneficiaries must purchase goods and services locally in the USVI when available, make certain con - tributions to scholarships, public education and other charitable causes in the USVI, and provide a plan for civic participation. Beneficiaries must also provide employee benefits and enact a management training programme. The application process requires the submission of a detailed application, including details of the benefi - ciary’s ownership, financial information and a back - ground check for beneficial owners. Submission of the application is followed by the application’s presenta - tion at a public hearing before the EDC commissioners and review of the application by the EDC commission - ers. Upon approval by the EDC, benefits are available for initial periods of 20 years for investments on the islands of St. Thomas and St. John, and for 30 years on St. Croix. Beneficiaries that make an additional investment in the beneficiary business – in infrastructure, new con - struction or refurbishment – in an aggregate amount of not less than USD2,000,500 during the term of their existing certificates are entitled to 100% of existing benefits for an additional period of five years upon the expiration of their certificates. Beneficiaries that invest in infrastructure, new construction or refurbish - ment in an aggregate amount of not less than USD1
million may be granted 100% of their existing benefits for an additional five years upon the expiration of their certificates, upon a finding of good cause by the EDA Board. Prior to the expiration of a benefits term, a beneficiary may seek an extension of 100% of ben - efits for an additional term of ten years. As part of the extension process, beneficiaries undergo a rigorous compliance review by the EDC and the Virgin Islands Department of Labour. Hotel and Tourism EDC Beneficiary Applicants In recent years, some hotel applicants under the EDC Program have committed to constructing low-density developments that are designed to promote environ - mental sustainability and low-impact construction. Other hotel EDC beneficiaries, such as King Christian Hotel in Christiansted, have restored historic struc - tures in the USVI to showcase local culture and tradi - tions, using innovative building techniques designed to enhance urban redevelopment. And hotels that have been operating in the USVI for decades are undergo - ing major upgrades and, in many cases, adding new brands to the USVI’s hotel offerings. EDC beneficiar - ies in the recreational tourism industry have likewise evolved to accommodate the growing segment of environmentally conscious tourists who are focused on experience-based travel. Hotel Development Act (HDA) Program The HDA Program, also administered by the EDA, was initially enacted in 2011 to provide a financing mecha - nism for new hotel development projects (and hotels seeking substantial upgrades) in the USVI. In 2019, the HDA programme underwent a complete overhaul in order to promote the tourism industry of the USVI and to provide for the planning, financing, reconstruc - tion, renovation and maintenance of new and exist - ing hotels in the territory in the aftermath of Major Hurricanes Irma and Maria, which slashed their way through the USVI in 2017. Specifically, the programme was amended to provide for the development, con - struction, reconstruction and renovation of commer - cial facilities and other hotel facilities. Now, the hotel room occupancy tax (HROT) can be 100% utilised by developers of new hotels, or up to 50% of the HROT for existing hotels where at least 70% of the units were previously damaged (by hurricanes, for example)
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