NOTE: Corporate income tax rate reduced to 21% (from brackets with a maximum tax rate of 35%) and alternative minimum tax repealed from January 1, 2018.
To demonstrate how the U.S. Virgin Islands’ tax exemptions apply, consider the hypothetical scenario of Sunseeker, Inc. Sunseeker, Inc. is a manufacturing company doing business exclusively in the USVI with annual sales of $1 million, which is a U.S. subsidiary of a U.S. corporation.
Sunseeker, Inc. exports its products to the United States and utilizes foreign components and parts.
1. Gross Receipts Tax Exemption
Annual Gross Sales
Tax Due (at a 5% rate)
100% Gross Receipts Exemption
To demonstrate how the U.S. Virgin Islands’ tax exemptions apply, consider the hypothetical scenario of Sunseeker, Inc. Sunseeker, Inc. is a manufacturing company doing business exclusively in the USVI with annual sales of $1 million, which is a U.S. subsidiary of a U.S. corporation. Sunseeker, Inc. exports its products to the United States and utilizes foreign components and parts.
2. Property Tax Exemption
Real Property Market Value (land, buildings)
Assessed Value (60% market value)
Tax Due (1.25% assessed value)
100% Property Tax Exemption
The real property tax exemption applies only to the property owned by the beneficiary and used in the specific business or industry for which an Economic Development Contract has been granted.
3. Excise Tax Exemption
Value of Imported Materials & Components
Excise Tax Assessed on 1.05% market value
Excise Tax Imposed (4% for most items)
100% Excise Tax Exemption
The excise tax exemption applies to equipment, raw materials and component parts used for manufacturing or assembling a product and to building materials, machinery and equipment for use in constructing the beneficiary’s physical plant. Other items used by a beneficiary, such as hotel furnishings, are not exempt from excise tax.
4. Reduction of U.S. Virgin Islands Customs Duties
Landed Cost for Foreign (non-US) items
U.S. Virgin Islands Customs Duties Due (6%)
Beneficiary's Liability at 1% Rate
Virgin Islands Customs Duty Reduction
The Customs duty reduction applies to raw materials and component parts imported into the U.S. Virgin Islands from non-U.S. sources for the purpose of producing, creating or assembling an article. No customs duty applies to such materials and parts imported into the U.S. Virgin Islands from U.S. sources.
5. Duty-Free Imports into the United States
Landed Cost for Foreign (non-US) items
US Customs Duty (assuming an avg. of 70%)
US Customs Duty Reduction
Under General Note 3(a)(iv) of the U.S. Customs Law, items manufactured or produced in the U.S. Virgin Islands for export to the United States may contain up to 70% of the finished product (50% for textiles, apparel and leather) on foreign materials, components, or parts and avoid U.S. customs duties.
6. Income Tax
Annual Gross Sales
Deducted Business Expenses
Taxable Income
Tax on $200,000 Taxable Income
Corporate Surcharge (10%)
Total Tax
90% Reduction
Net Tax (Effective Tax Rate of 2.31%)
A 90% exemption also applies to the individual income tax liability of V.I. resident stockholders on income derived from dividends of the corporation or, for S corporation or partnership distributions.
6. Income Tax
Net Tax (effective tax rate of 2.31%)
Gross Receipts Tax Exemption (100%)
Property Tax Exemption (100%)
Excise Tax Exemption (100%)
U.S. Virgin Islands Customs Duty Reduction
Duty Free Imports into the U.S. customs duty reduction
U.S. Virgin Islands Income Tax Reduction (90%)
Total
NOTE: Corporate income tax rate reduced to 21% (from brackets with a maximum tax rate of 35%) and alternative minimum tax repealed from January 1, 2018.
Unlock new horizons within the US Virgin Islands with the business potential our territory offers with the help of the USVI Economic Development Authority.
With tailored tax programs, incentives, financing options and more.
St. Croix
St. Thomas/St. John
© 2001 - 2025 United States Virgin Islands Economic Development Authority
