A flurry of businesses seeking to register themselves as foreign sales corporations by the Sept. 30 deadline has led the Corporate Division of the Office of the Lt. Governor to be open on St. Thomas Saturday from 9 a.m. to noon, according to its director, Lorna Webster.
Some FSC management companies have reported as many as four to five times the usual number of applicants this week, even though the congressional legislation giving Sept. 30 as the deadline for companies to choose FSC status has yet to pass the Senate.
In August, the U.S. House of Representatives passed the Extraterritorial Income Exclusion Act, which is designed to encourage U.S. foreign trade but does not require U.S. companies to establish offshore subsidiaries, or foreign sales corporations.
With the demise of FSCs, the Virgin Islands government stands to lose an estimated $10 million annually in tax and other revenue.
But the EIE proposal has already been rejected by the European Union, which brought the original unfair trade complaint to the World Trade Organization earlier this year that led to the congressional action. The EU already has said it will file a similar complaint against the new program once it is in place.
Under the legislation, no companies may choose FSC status after Sept. 30, 2000, and all FSCs must close out by Dec. 31, 2001.
