What this is: Incorporating a business in the US Virgin Islands (USVI) offers several benefits, such as lower taxes and a favourable business environment. In order to incorporate in the USVI, there are a few steps that need to be taken.
What this means: We’ll help explain some basic things you should know, including how to register as a foreign corporation and annual franchise tax and reporting requirements.
So, you’ve consulted with your attorney and/or tax advisor and decided that it’s in your best interest to do business in the USVI. What’s next?
While the USVI are a US territory, the requirements for domestic incorporation or foreign corporation registration in the USVI are somewhat different than in a US state. It’s wise to get a handle on these distinctions – as well as annual reporting or franchise tax responsibilities – in advance of a move to the USVI.
Need to form a company in the US Virgin Islands? Visit our International Company Formation page to learn more.
What You Should Know About Incorporating in the US Virgin Islands
First, you’ll have to decide (again, with your legal and/or tax professional) which of the three types of corporations that can be formed in the USVI best meet the needs of your business:
- Domestic Corporations are located in the USVI and do business in the USVI. These companies may be eligible for tax incentives if they meet specific criteria set by the US Virgin Islands Economic Development Authority.
- Exempt Companies may not engage in the active conduct of trade or business in the USVI or the United States, and are exempt from USVI income, gross receipts and withholding taxes, as well as licence requirements, upon filing an exempt company election. Individuals who are residents of either the US or the USVI may not own 10% or more of a USVI exempt company.
- Foreign Sales Corporations (FSCs) were established by the US Congress in 1984 and allow US exporters to reduce their taxes on export income.
To form one of these types of USVI corporations, articles of incorporation must be drafted and filed through Catalyst, an online business platform managed by the Office of the Lieutenant Governor, which serves as the corporate registry for the USVI. (Note that there is not a standardised form for incorporation.) As part of the incorporation process, a corporation must appoint a USVI registered agent to accept any process served on the corporation in the USVI.
Unlike most US states, the USVI requires corporations to have a minimum of three directors, three officers, a president, treasurer and secretary. Corporate directors are not allowed. Stock must also be registered and there is a minimum capital requirement of $1,000.
Once formed, corporations that plan to do business in the USVI must obtain and regularly renew a business licence. Corporations wishing to obtain a business licence must complete the proper applications in addition to keeping certain documents on file with the Department of Licensing and Consumer Affairs.
How to Register as a Foreign Corporation in the USVI
If your legal/tax professional recommends not incorporating in the USVI, you can still do business if you register as a foreign corporation. Once again, this must be completed through their online portal.
To do so, you must file a Certificate of Appointment of Process Agent and Sworn Statement with the Office of the Lieutenant Governor. The certificate must be accompanied by a copy of the company’s Certificate of Incorporation and any amendments, a Certificate of Good Standing from its domestic jurisdiction, a signed consent of the registered agent agreeing to act in that capacity and a simple statement of the foreign corporation’s assets, liabilities and capital stock.
Like USVI domestic corporations, foreign corporations are required to get a USVI business licence.
USVI Annual Franchise Tax and Reporting Requirements
All corporations conducting business in the USVI must submit their corporate annual reports and franchise tax annual reports online. Supporting financial statements, which include a general balance sheet and profit and loss statement, must also be provided. These reports are due annually and must be filed on or before June 30, including the year of formation or registration.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
