How To Open An Offshore Company in US Virgin Islands (USVI)
FAS CPA & Consultants
The USVI is an unincorporated territory of the United States of America where most US federal laws apply. US federal tax law for the USVI is not administered by the IRS but by the USVI Bureau of Internal Revenue (BIR) as a mirror system. The USVI is in the Caribbean, close to Puerto Rico.
A USVI Tax Company
⇒ Pays no US or USVI taxes on income earned anywhere outside the US and the USVI except an annual $1,000 franchise fee to the USVI Government.
⇒ Stocks are not subject to US federal or USVI estate, gift or inheritance taxes if the donor/decedent is a non-resident non-citizen of the United States.
⇒ Dividends, interest, royalties, and most other US-sourced passive income earned are subject to a 30% withholding at the source, by the US.
⇒ The USVI imposes no such deduction on passive income.
⇒ The USVI imposes no tax on capital gains earned from the sale of US stocks or securities in either of the two jurisdictions.
Albeit directly or indirectly, no US person is allowed to own ten percent or more of the stock of a USVI tax-exempt company – measured by vote or value. USVI companies are generally not suitable for US persons.
Requirements
USVI tax-exempt companies can be incorporated within 24-48 hours.
Board
The company must appoint three or more directors and three officers, none of which needs to be residents of the USVI. The company must have a president, a secretary, and a treasurer, of which only the president must be a director. The president and the secretary cannot be the same person. No person is allowed to hold more than two offices. If the beneficial owner has no interest in providing directors and officers, service providers can provide nominees. For servicing of process documents, the company must appoint a local agent.
Capital
The minimum capital requirement is $1 million. It is typically structured with 1000 shares without par value. No bearer shares are allowed.
Filing Requirements
There are minimal filing requirements. It is not required to file a tax return. A simple franchise tax return will do and has to be submitted by June the 30th of each year. The return simply requires the signature of the resident agent or an officer or director. Current officers and directors should be listed on the return, but the shareholder’s identity does not have to be revealed.
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Domicile To The USVI
Foreign companies can relocate to the USVI. All that is required from them is that they file a certificate of domestication. Added to this, should be amended articles of incorporation with a copy of the original memorandum and articles of incorporation from the original jurisdiction.
As soon as the required $500 filing fee is paid, the erstwhile foreign corporation will be treated as if it was established in the USVI.
⇒ Domestication in the jurisdiction of the USVI is useful for the owners of existing offshore companies in jurisdictions like the British Virgin Islands or Panama where outbound remodifications are lawful, who wishes to take advantage of the benefits of a USVI exempt company without the need to transfer ownership of assets from the existing company.
Privacy
What many investors find useful is the privacy USVI exempt companies offer them. The identity of shareholders is never part of the public record; only the names and addresses of directors and officers of these companies are published.
USVI Tax authorities may require information about the beneficial owners of exempt companies. This is to determine if they are US persons. Proof can often be provided without revealing the owners’ identity.
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Addendum
⇒ The USVI is expressly excluded for the IGA agreements for the implementation of FACTA.
What does this mean?
Financial institutions in the USVI are EXCLUDED from reciprocal obligations and commitments to exchange information.
⇒ The USVI is not part of the common reporting standard known as CRS, as approved by the OECD.
⇒ The USVI (like the US) does not recognize automatic exchange with other countries ¾ only upon request.
What does this mean?
When a foreign government seeks information about a particular USVI exempt company that is absent from the public registry or on its bank balances and financial accounts, they have to direct their request to the United States of America’s federal government.
In turn, the federal government would request the information from the USVI government, which would comply only with information under existing administrative agreements.
The result is that information is not freely accessible to foreign governments.
Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.
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