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)
critical. There are also logical tie-ins between cer - tain knowledge-based businesses and tourism in areas such as coral research and restoration. Other examples of technology and knowledge-based busi - nesses that qualify for the RTPark Program include: for tech businesses – specialised software develop - ment; mobile applications; medical and other record processing; software as a service; and online busi - nesses such as marketing, travel, registration of prod - ucts or services, subscription services and games; for knowledge-based businesses – research businesses; information technology businesses; electronic hosting facilities; agricultural research and technology busi - nesses; and other businesses that require specialised knowledge. Oversight of the RTPark Program is vested in the seven-member RTPark Board of Directors, which by statute includes the chair of the UVI Board of Trustees and the president of UVI. In most cases, an applicant, through a legal repre - sentative, negotiates the terms of the applicant’s ten - ancy with the RTPark’s executive director. Negotia - tions include: • the amount of the one-time entry fee paid by the applicant, which is typically between USD50,000 and USD100,000, depending on the projected gross income of the applicant; • the applicant’s obligation to pay annual manage - ment fees to the RTPark, typically 1% to 3% of the applicant’s gross income; • the structuring of an annual charitable donation to UVI that can include scholarships, internships, faculty support, funds for specific programmes and in-kind contributions of time (typically with annual caps); and • the percentage of equity interest to be awarded to the RTPark, which can be non-voting and have different distribution rights from those of the other owners. Once negotiations have been finalised, a term sheet is entered into between the applicant (referred to under the RTPark Program as a Protected Cell) and the RTPark, providing the basis for the formal appli - cation that covers the applicant and its owners. The
final terms are ultimately memorialised in the Pro - tected Cell’s Park Tenant Agreement, which serves as the operative document defining the relationship between the Protected Cell and the RTPark. Each RTPark application requires an application fee and a background check. Benefits under the RTPark Program are initially avail - able for 15 years and can be renewed for an initial renewal period of ten years, followed by subse - quent renewal periods of five years, subject to board approval. Beneficiaries leaving before the end of the 15-year period are subject to an exit fee, negotiated as part of the Park Tenant Agreement, and RTPark offers transitioning assistance to ensure minimal disruption. As with the benefits under the EDC Program, the RTPark Program offers a 90% tax credit for the Pro - tected Cell business and for dividends, distributions or allocations paid to direct and indirect owners of the business if the owners are bona fide residents of the USVI. Such income must be from USVI sources or effectively connected with conducting a USVI trade or business. For the Protected Cell business, the reduc - tion results in an effective tax rate of approximately 2.31% on eligible income. No withholding tax is imposed on payments to US corporations or US individual residents. Furthermore, RTPark beneficiaries with foreign corporate or non- resident alien owners are exempt from withholding tax on interest payments and enjoy a reduced withhold - ing rate of 4.4% or 4% on dividend and royalty pay - ments overseas (for corporate and individual owners, respectively). Other benefits under the RTPark Pro - gram mirror those available under the EDC Program. Opportunity Zones – Federal Benefits for USVI Investments Several US federal programmes are available for investors in the USVI. The December 2017 Tax Cuts and Jobs Act established the Opportunity Zone Pro - gram, which provides immediate and long-term tax advantages to US investors in Opportunity Zones. The Opportunity Zone Program was created to encourage private investment in economically distressed neigh - bourhoods by offering investors access to new capital gains tax incentives in exchange for placing qualified
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