So you’ve consulted with your attorney and/or tax advisor and decided that it’s in your best interest to do business the U.S. Virgin Islands (USVI). What’s next?
While the USVI are a U.S. territory, the requirements for domestic incorporation or foreign corporation registration in the USVI are somewhat different than what happens in the other states. It’s wise to get a handle on these distinctions – as well as annual reporting or franchise tax responsibilities – in advance of a move into the USVI.
What You Should Know About Incorporating in the U.S. Virgin Islands
First, you’ll have to decide (again, with your legal and/or tax professional) which of the three types of corporations that can be formed in the USVI best meet the needs of your business:
- Domestic Corporations are located in the USVI and do business in the USVI. These companies may be eligible for tax incentives if they meet specific criteria set by the U.S. Virgin Islands Economic Development Authority.
- Exempt Companies may not engage in the active conduct of trade or business in the U.S. Virgin Islands or the United States, and are exempt from USVI income, gross receipts and withholding taxes, as well as license requirements, upon filing an exempt company election. Individuals who are residents of either the U.S. or the U.S. Virgin Islands may not own 10% or more of a USVI exempt company.
- Foreign Sales Corporations (FSCs) were established by the U.S. Congress in 1984 and allow U.S. exporters to reduce their taxes on export income.
To form one of these types of USVI corporations, Articles of Incorporation must be drafted and filed through Catalyst, an online business platform managed by the Office of the Lieutenant Governor, which serves as the corporate registry on the U.S. Virgin Islands. (Note that there is not a standardized form for incorporation.) As part of the incorporation process, a corporation must appoint a U.S. Virgin Islands registered agent to accept any process served on the corporation in the USVI.
Unlike most U.S. states, the USVI requires corporations to have a minimum of three directors, three officers, a president, treasurer and secretary. Corporate directors are not allowed. Stock must also be registered and there is a minimum capital requirement of $1,000.
Once formed, corporations that plan to do business in the U.S. Virgin Islands must obtain and regularly renew a business license. Corporations wishing to obtain a business license must complete the proper applications in addition to keeping certain documents on file with the Department of Licensing and Consumer Affairs.
How to Register as a Foreign Corporation in the USVI
If your legal/tax professional recommends not incorporating in the USVI, you can still do business if you register as a foreign corporation. Once again, this must be completed through their online portal.
To do so, you must file a Certificate of Appointment of Process Agent and Sworn Statement with the Office of the Lieutenant Governor. The certificate must be accompanied by a copy of the company’s Certificate of Incorporation and any amendments, a Certificate of Good Standing from its domestic jurisdiction, a signed consent of the registered agent agreeing to act in that capacity, and a simple statement of the foreign corporation’s assets, liabilities and capital stock.
Like USVI domestic corporations, foreign corporations are required to get a USVI business license.
USVI Annual Franchise Tax and Reporting Requirements
All corporations conducting business in the USVI must submit their corporate annual reports and franchise tax annual reports online. Supporting financial statements, which include a general balance sheet and profit and loss statement, must also be provided. These reports are due annually and must be filed on or before June 30th, including the year of formation or registration.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.