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Charlotte Amalie
Monday, April 15, 2024
HomeNewsLocal newsUSVI, Guam to Get $296.6M In Rum Cover-Over Payments

USVI, Guam to Get $296.6M In Rum Cover-Over Payments

Advance cover-over payments approved for the territory should be paid by Sept. 9, according to the U.S. Interior Department. (Source file photo)

The approval of an advance in rum cover-over payments by the U.S. Department of the Interior’s Insular Affairs Office will put $226.1 million in the territory’s coffers, along with $70.3 million for Guam, by Sept. 9.

The payments represent rum tax cover-over and federal income tax Section 30 revenues estimated for fiscal year 2023, according to an Interior Office press release.

Under the Revised Organic Act, any excise tax collected on V.I. manufactured rum imported into the United States is transferred to or “covered-over” to the territory. The V.I. government submits an advance estimate of rum excise taxes to the Office of Insular Affairs on an annual basis so that a payment can be made by September of each fiscal year.

Any adjustments necessary are calculated and paid later based upon amounts advanced from rum excise taxes derived from the Virgin Islands and actual receipts collected by the federal government. The fiscal year 2023 advance payment to the V.I. government was calculated using the $10.50 per proof-gallon rate since the $13.25 per-proof gallon rate expired at the end of December 2021.

“These funds are critical to the governments in both Guam and the U.S. Virgin Islands to help address important needs. The Office of Insular Affairs is working closely with the Internal Revenue Service to provide accurate numbers for adjustment payments and ensure that we are abiding by current law in all calculations,” according to Assistant Secretary for Insular and International Affairs Carmen G. Cantor.

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