July 15, 2004 – You don't have to be one of the big guys to qualify for tax benefits in the territory. That was the message of Frank Schulterbrandt, chief executive officer of the Economic Development Authority, and his staff at an EDA open house held Thursday at the Battery in Cruz Bay.
"You can have a bed and breakfast and get these benefits, but you have to pay hotel occupancy taxes," Nadine Marchena, EDA assistant chief executive officer, explained.
You also have to meet certain guidelines, which include investing at least $20,000, hiring two employees and earning less than $1 million a year from the business.
The tax break package for small businesses is good for five years, compared to 10 years for the bigger companies get — or 15 years for large companies in the Frederiksted area.
The breaks for small businesses are the same as for large companies, though: up to 90 percent exemption on business income taxes and corporate dividends and up to 100 percent exemption on gross receipts taxes and excise taxes. Additionally, beneficiaries pay only 1 percent customs duties instead of what would otherwise be as much as 6 percent.
Like larger companies, small business applicants must pass scrutiny with the Economic Development Commission, which includes a public hearing.
However, the EDA and the University of the Virgin Islands Small Business Development Center can help. "Our mandate is to create gainful employment," Marchena said.
The agencies can also help if your business is in trouble.
"We hope we can make a difference with companies that may not make it," Warren Bush, SBDC director, said.
The EDA also offers a handful of loan programs, but they're intended to fill the gap when banks can't help. "We're second-chance financing, because we won't do anything the banks will do," Carolyn Henry, loan officer for the Small Business Development Agency, said.
The SBDA comes under the EDA umbrella; the SBDC as a UVI agency does not.
Small businesses may also want to get on the EDA's preferred supplier list. "We encourage companies to do business with responsible Virgin Islands suppliers," EDA compliance officer Margarita Benjamin said.
Schulterbrandt, observing that only a handful of people showed up, described St. John as a hard sell. However, he vowed to keep trying to get the word out about EDA programs that can help small businesses grow.
St. John businessman Jose Penn, a member of the Economic Development Commission, which decides who gets tax breaks and who doesn't, urged Schulterbrandt not to give up — and to devise programs that work for the island.
"St. John has some unique problems," Penn said. "The cost of doing business is so much higher."
Earlier, Schulterbrandt noted that St. John doesn't have any enterprise zones similar to those on St. Croix and those proposed for St. Thomas. Enterprise zones are disadvantaged geographic areas where businesses are offered tax incentives in order to stimulate economic growth.
Also, Schulterbrandt said, St. John does not have a designated industrial park area, as do St. Croix and St. Thomas.
For more information, visit the Economic Development Authority Web site, or call 774-8104 on St. Thomas or 773-6499 on St. Thomas.
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