2019 US Virgin Islands Code
Title 13 - Corporations and Associations
Chapter 14 - Exempt Companies
§ 855. Exemption from income taxes
(a) An exempt company, other than an exempt insurer, an exempt mutual fund, or an exempt international banking facility, shall be treated with respect to its exempt activities for the purposes of the Internal Revenue Code (as it applies in the United States Virgin Islands) as a foreign corporation which does not earn United States Virgin Islands source income and which is not engaged in trade or business within the United States Virgin Islands.
(b) An exempt insurer, an exempt mutual fund and an exempt international banking facility shall be exempt from the payment of income tax under the Internal Revenue Code (as it applies in the United States Virgin Islands) with respect to its exempt activities provided, however, that this exemption shall not apply to:
(1) income which is derived from sources within the United States, unless the income is effectively connected with the conduct of a trade or business within the United States Virgin Islands, or
(2) with respect to an exempt insurer that is not required to meet the ownership requirement of Section 852(3) of this chapter, income which is derived from sources other than the United States Virgin Islands, unless the income is effectively connected with the conduct of a trade or business within the United States Virgin Islands.
(c) In the case of an exempt company electing to be subject to the provisions of this subsection:
(i) subsections (a) and (b) of this section shall not apply;
(ii) with respect to its exempt activities, such exempt company shall be subject to the payment of income tax under the Internal Revenue Code (as it applies in the United States Virgin Islands) but only to the extent of one percent (1%) of its taxable income from such activities; provided however, that of the one percent (1%) of such taxable income, ten percent (10%) thereof shall be put aside and used for promotion and advertising of the Exempt Company program by the Department of Economic Development and Agriculture.
(iii) such exempt company may elect to credit against its income tax liability described in clause (ii) above the amount of franchise tax it pays during the taxable year pursuant to section 860(a) of this chapter, but in no event shall the amount of such credit exceed the amount of such income tax liability; and
(iv) any exempt company which elects to take the credit described in clause (iii) above in respect of any franchise tax payment may not also deduct the amount of such franchise tax payment in determining its taxable income.
