How is this change bad for the VI?
If the company is legitimately doing business in the VI and not simply using the EDC program as a tax dodge, what is the problem? Why the fuss?
The new law simply states that you must in fact be a resident of the VI (which they already have said they are) and that only income generated from investments in the Virgin Islands is eligible for tax breaks. That is exactly what the EDC program is set up to do – encourage investment in the VI. All non VI income will not be eligible for the tax breaks. Again, since EDC is trying to promote investment in the VI, and is not in the business of offering tax shelters, that should not bother anyone.
The only real change the Treasury decision creates is really absolutely wonderful news for the VI. It says that all the income tax due on all non VI income will be paid to the VI. That means EDC beneficiaries who are currently dodging 20 million dollar tax bills on non VI income will have to pay that money to us! How can this be bad? This is wonderful news. Since it is retroactive to January 1, 2004, we are going to be swamped with money come March 15th (due date for Corporate income tax).
If they are legitimate investors, the new laws change nothing. If they are using EDC as a tax dodge, it will no longer work. What is the problem?
Pam Gaffin
St. John
