The United States Virgin Islands (U.S.V.I.) officially the “Virgin Islands of the United States” and also called the “American Virgin Islands”, are a group of islands in the Caribbean which are Territories of the United States.
The U.S. Virgin Islands are formed by three islands called Saint Thomas, Saint Croix, and Saint John. The total land area of the territory is 133 square miles (346 square kilometers). Saint Thomas Island contains the capitol Charlotte Amalie.
The United State Congress has enacted specific laws regulating the incorporation and business of U.S. Virgin Islands corporations and tax incentives.
U.S. Virgin Islands corporations receive several benefits including:
• Tax Incentives: The U.S. Virgin Islands offers major tax breaks like a 100% exemption from business property, excise, and gross receipt taxes. In addition, there is a 90% reduction of corporate and personal income taxes for qualified businesses. These tax reductions were approved by the U.S. Congress in order to boost the local economy.
• U.S. Court System: The U.S. Virgin Islands are part of the U.S. Court System. This benefits U.S. businesses who wish to depend on the U.S. judicial system rather than incorporating in another country.
• One Shareholder: Only one shareholder is required to incorporate in the U.S. Virgin Islands. In addition, shareholders can be private persons or corporations.
• Low Minimum Authorized Capital: Only $1,000 USD is the minimum authorized capital.
• No Annual Meeting: Corporation annual meetings are not required and if conducted can be held anywhere in the world.
U.S. Virgin Islands corporations must select a unique name which is not similar to any other corporation.
Office Address and Local Agent
Corporations are required to appoint a local registered agent and maintain a local office address for service of process and official notices.
Only a minimum of one shareholder is required for a U.S. Virgin Islands corporation.
Both private persons and corporations can be shareholders.
Directors and Officers
U.S. Virgin Islands corporations are required to have a minimum of three directors and three officers (President, Treasurer and Secretary).
U.S. Virgin Islands corporations are required to declare a minimum authorized capital of $1,000 USD.
U.S. Virgin Islands corporations are not required to pay corporate taxes under the U.S. Internal Revenue “mirror code.” The one exception to this rule is if the corporation decides to be considered, for federal and territory tax reasons, as a regular domestic corporation (not an offshore corporation). US Virgin Islands corporations are required to file yearly tax returns.
The “mirror code” is defined by the U.S. Internal Revenue Service’s Tax Code to ensure that taxes are paid to the U.S. Virgin Islands instead of the U.S. government.
In addition, unless a corporation shareholder is exempt from U.S. income taxes, its distributive share of corporate income and loss is treated as income or loss to the individual taxpayer and reported on its annual tax return, regardless of whether or not the member received the income.
If a U.S. Virgin Islands corporation has only one owner, then the owner is considered the same as the entity he or she owns for income tax purposes.
Annual renewal fees for U.S. Virgin Islands corporations are $300 USD.
While there is no public record keeping expected of U.S. Virgin Islands corporations, they are expected to allow government access to records they do keep.
Accounting and Audit Requirements
There are no specified recording requirements imposed on U.S. Virgin Islands corporations. Still, the corporation is expected to allow access to records it does keep.
U.S. Virgin Islands corporations must file annual reports and also pay the annual report fee by June 30th of each year. The annual report fee is equal to .15% of the capital used by the corporation in conducting business during the prior calendar year, with a minimum fee of $300 USD.
Annual General Meeting
U.S. Virgin Islands corporations’ annual meetings of directors or shareholders are optional and can be held anywhere.
Time Required for Incorporation
U.S. Virgin Islands incorporation is estimated to take about one week to one month. The completion time depends on the turnaround with the corporate name registration, as well as, how accurately the corporation completes its registration documents.
U.S. Virgin Islands shelf corporations are available for faster incorporation.
The U.S. Virgin Islands offers several benefits to its offshore corporations including: only one shareholder required to incorporate, several tax incentives, being part of the U.S. Court System; low minimum authorized capital, and no requirement for annual meetings.