Industrial Development

    To foster investment, growth and diversification in the United States Virgin Islands, the federal and territorial governments have enacted a series of incentives (in addition to the tax advantages in the Laws section of this handbook) to create a business climate that generates jobs. Many of the new jobs are in export-related activities.

IDC Benefits

    Companies qualifying for benefits through the USVI Industrial Development Commission (IDC) receive a substantial reduction in or an exemption from all taxes imposed on businesses.

    The IDC is the key investment development agency for the United States Virgin Islands and administers the incentive program. . The process for seeking IDC benefits includes an application for benefits through the IDC's executive director, a public hearing, approval or denial by the seven-member IDC and approval or denial of IDC- authorized applications by the Governor.

    In the past, the Governor's review of IDC-authorized applications required up to 60 days. Governor Roy L. Schneider has approved applications in three days or less. Because no IDC-related investments are made and no jobs are created or filled until after the paperwork is completed, Governor Schneider is committed to reviewing these applications promptly.

The basic qualifications for IDC benefits are:

  • Investment of at least $50,000 exclusive of inventory in an eligible business.
  • Employment of at least 10 USVI residents on a full-time basis.

    Small, locally-owned manufacturers that meet the loan criteria of the Minority Small Business Development Agency may receive IDC benefits with a minimum investment of $20,000 and two employees. Generally, these businesses make tourist oriented crafts and souvenirs that substitute for imported items.

  


On St. Thomas, St. John and the eastern half of St. Croix, the initial benefit package is for 10 years. On the western half of St. Croix, the initial benefit package is 15 years. Companies qualifying under the small business manufacturing program may receive benefits for five years.

 

 

 

                                          

IDC Incentives

Qualifying companies are eligible for IDC incentives up to and including:

  • A 90% reduction in local income tax payments.
  • A reduction in the customs duty rate from the standard 6% to 1% for the value of raw materials and component parts imported from outside the United States.
  • A full exemption from excise tax payments on raw materials and component parts brought into the United States Virgin Islands for qualifying purposes.
  • A full exemption from property taxes and the gross receipts tax.
  • A reduction in the tax rate on company dividends from 10% to 4%, with an additional reduction to 2% if at least half of dividends are reinvested in eligible USVI activities for at least five years.
  • An exemption from the withholding tax on interest.
  • Availability of rental space in the 25-acre St. Croix Industrial Park-in a prime location on St. Croix adjacent to the Alexander Hamilton Airport and near the major seaport-and the 3.5-acre St. Thomas Industrial Park, whose first tenant moved in during 1995.

 

     USVI residents associated with qualifying beneficiaries (corporations or partnerships) may also receive benefits. These include up to a 90 percent reduction of income taxes paid on stock dividends received from the company and a 90 percent reduction of income taxes paid by resident partners on distributions from a partnership and also distributions to shareholders of Subchapter S companies.

 

 

 

 

Eligible Businesses

The types of businesses eligible to receive IDC benefits include:

  1. Tourism-related facilities, such as hotels and guest houses, transportation services and selected recreation facilities.
  2. Goods-producing businesses, such as agriculture, mariculture, manufacturing and utilities.
  3. Businesses that provide services to customers outside the United States Virgin Islands.
  1. Assembly, bottling and/or export port packing operations.
  2. Commercial and graphic art services.
  3. Computer service centers.
  4. Dental laboratories.
  5. Economic, scientific or management consulting services.
  6. Exempt Insurance Management Companies (Captive Insurance).
  7. International commercial distribution and trading services.
  8. International public relations services.
  9. Mail order firms.
  10. News syndicates.
  11. Optical and ophthalmologic laboratories.
  12. Photographic laboratories, including film processing
  13. Prefabricated houses.
  14. Processing, editing and dubbing of cinematographic films.
  15. Production of engineering and architectural blueprint and plans for construction projects outside the USVI.
  16. Public auditing.
  17. Publicity firms.
  18. Repair and maintenance services for maritime vessels and aircraft.
  19. Repair services for electrical and electronic equipment and watches.
  20. Repair services for machinery and heavy equipment in uses including agriculture, industry, construction, mining and transportation.

    In addition, the Industrial Development Commission may grant benefits to other businesses that the Commission deems to be offering economic benefits to the people of the United States Virgin Islands.