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Doing Business in US Virgin Islands
 
 
 

General

The US Virgin Islands is a great place to establish a business. In addition to a full range of businesses to serve and supply the local population, opportunities also exist to service the tourist trade in such areas as retail stores and gift shops, hotels, restaurants and attractions such as dive operations and the like.

The USVI Industrial Development Program provides exemptions from nearly all local taxes and a 90% income tax exemption. In order to qualify, a business must invest $50,000 or more in a USVI business and employ ten persons. Initial tax benefits are granted by the USVI Industrial Development Commission for either 10 or 15 years and may be renewed for five year periods. The Industrial Development Program is typically used by hotels, light manufacturing enterprises, and service businesses. Benefits are usually not granted for businesses which primarily serve the local market. USVI resident shareholders of companies which have benefits are also entitled to 90% income tax exemptions.

Manufacturers which plan to import products into the US can combine the benefits of the Industrial Development Program with those of a federal law (called the "Headnote 3A" program) to eliminate US customs duties if there is a sufficient amount of value added to the product in the USVI.

Establishing a USVI Corporation

Any three individuals may incorporate a USVI corporation by executing (before a notary public) and filing articles of incorporation with the office of the Lieutenant Governor of the Virgin Islands. The corporation is formed as soon as the articles are filed and the filing fee is paid. The incorporators or the directors adopt by-laws to govern the corporation's affairs. The method of incorporation is the same whether a company is being formed as a domestic corporation, an exempt company, or a foreign sales corporation.

The stock of a USVI corporation must be registered and there is a $1,000 minimum capital requirement. Stock may or may not have a par value. The "standard" corporation has 1,000 shares without par value.

A USVI corporation must have three directors (all of whom must be individuals) who manage its affairs. It is also required to have at least three officers: a president (who must be a director), a secretary, and a treasurer. Other officers are allowed as well. A corporation must appoint a local resident agent for service of process.

Corporations organised outside the USVI may qualify to do business in the USVI by filing a copy of their articles of incorporation (or equivalent document), appointing a resident agent, providing some financial information, and paying a fee.

Domestic corporations, and foreign corporations authorised to do business in the USVI, are subject to an annual franchise tax and must file an annual report by June 30 of each year. The franchise tax is a minimum of $150 per year.

Moving an Existing Corporation to the USVI

The USVI permits both the inbound and outbound re-domiciliation of companies and it is the only jurisdiction under the US flag to allow for both of these options. An inbound re-domiciliation is when a company formed outside the USVI wants to move to the USVI and be treated as if it had been formed there. When the company moves into the USVI it can also elect to be treated as an exempt company if it otherwise qualifies.

An outbound re-domiciliation, by which a USVI corporation moves its domicile to another jurisdiction, is allowed, provided that the laws of the jurisdiction to which the company wishes to move permits it. The company must first prepare and file whatever documents are required by the other jurisdiction; then an affidavit is filed with the USVI as evidence that the company has continued its existence elsewhere. Then the government issues a certificate of discontinuance. A corporation which has removed its domicile from the USVI is not liable for future franchise or other taxes but it does not avoid liabilities incurred prior to its re-domiciliation.

 

 
 

 



 


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