Good day, I'm Don King, part of the law firm King of Warm PC. We specialize in tax issues, business transactions, and estate planning, including wills and trusts. Today, I am in St. Thomas, part of the US Virgin Islands. Behind me, you can see the beautiful scenery where the Atlantic Ocean meets the Caribbean. Now, let's discuss the tax system in the US Virgin Islands. In terms of income taxes, US Virgin Island residents do not file returns or pay taxes to the IRS. Instead, they pay corporations formed in the USVI, which then file returns and pay income taxes directly to the Virgin Islands Bureau of Internal Revenue. The tax rates and rules are the same as the regular US income tax, using a mirror system of taxation. However, there are differences between how the mirror system applies to corporations and individuals. While both are subject to the regular corporate tax rate, USVI corporations also face a 10% corporate tax surcharge. This brings the maximum tax rate for corporations to 38.5%. It is worth noting that there are no local income taxes or surcharges for individuals, other than the mirror system rates. The overall rate of income tax for individuals in the US Virgin Islands is equivalent to someone who resides in a state without any state income tax. Under the mirror system, a corporation incorporated in the USVI and one outside of the USVI are considered foreign for tax purposes. US citizens and permanent residents who earn income from the USVI but are not residents of the USVI pay the same total amount of tax as they would if all their income came from US sources. However, the tax is apportioned between the United States and the USVI. These individuals must file their Form 1040 tax return along with Form 8689...
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Virgin islands tax return Form: What You Should Know
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