"To qualify for the tax incentives, firms must invest at least $100,000 in the territory, buy products such as office supplies and computers in the U.S.V.I., contribute to area charities and hire at least 10 people, 80 percent of whom must be natives of the islands. Company owners must live in the U.S.V.I. for at least half of the year, under federal requirements. They have to undergo five examinations a year by the Economic Development Authority. The IRS published a notice saying the statute of limitations restricting the agency from examining more than three years of tax returns doesn't apply for those newly claiming U.S.V.I. residency. That allows the IRS to inspect tax returns going back decades. The IRS also drafted a new form for island residents it says is needed to prove valid residency. The form requires those who stop filing tax returns with the IRS in order to file them in the U.S.V.I. to list where their immediate family lives, where their cars are registered and where they hold driver's licenses. " The Bloomberg article (my emphasis added) is from '07, but I doubt much has changed. In other words, it's a serious pain in the ass, and as you suggested, only worthwhile if you're making well into the 7 figures. Though I'd still make the argument that in such an instance, buying citizenship in St Kitts or Dominica is the better option. Why go through all that extra legwork (hiring employees, audits, tests, etc), all with the possibility of failing any one of them (or the laws change, or the IRS merely "revises its guidance") and risk receiving no tax benefit whatsoever, just to save your passport?
The main reason I think the USVI is worth it is due to the keeping the passport (given family reasons and such.) Your article hits it perfectly and is exactly why more and more hedge funds and prop groups are beginning to migrate down to the USVI. $100k and charitable contributs and such are a mighty cheap entry for the 5% rate with the ability to retain citizenship. Our firm is in the process of opening a small group there with 6 traders and I think it will be interesting to see the results. Two of the traders have families and have enrolled the children in the Country Day school which has a terrific reputation. Both traders with families will return to the states while the kids are out of school for the summer...not a bad deal.
The US Virgins are real alternatives. The tax setup for those in that bracket is truly amazing. Although I have not been there in some years I spent a good deal of time on all three in the late 70's and they are simply not interesting places to live except for the weather/beach. I am a New Yorker so I am accustomed to more variety but I think almost any urban resident wouls have a real time adjusting. What is the point of earning seven figures if you need to live in boredom?
Congress and the IRS love you -- you are the cash cow that funds their junkets, salaries, and the idiot government programs that they use to purchase votes with. How could they fund wars fought thousands of miles away against countries that never attacked us without people like you? If you think your congressman sees you as anything other than a tax slave you are very naive indeed. The rules that require you to pay tax on income you earn outside the country, including income earned while living outside the country, are all to ensure that you can never leave the plantation.
Actually, the article was highlighting how many funds were leaving the USVI due to the onerous hurdles in achieving the tax benefit. Again, it was published 3 years ago, perhaps things have changed, I haven't heard anything new on the subject. I agree, please keep us updated. Are you planning to hire the requisite 10 local citizens right away? If so, in what type of roles/capacity?
get this through your head- when it's comes to taxes in US-you're guilty until proven innocent http://www.chinadaily.com.cn/world/2009-05/04/content_7742376.htm
The US is one of very few countries in the world that taxes foreign based earnings. It takes no imagination to understand that. This is not a creative writing or art appreciation website. Imagination not required in this area ... just reality.
That's why for most people with half a brain (and some money) getting a US green card can become more of a liability than an opportunity. The long-term tax implications can be very costly. http://www.portfolio.com/news-markets/top-5/2008/07/08/US-Tax-Law-Hits-Foreign-Workers/
This expose' on Obama tax policy with regard to multinationals underscores the crisis of diminishing manufacturing in the USA. As I understand, German corporations that manufacture goods for export are not taxed on the profits derived from the sale of such exported products. Same for Japan. This puts US manufactured goods and services at a huge competitive disadvantage in the world mkt. This is yet another reason to implement the FAIR Tax.
the usvi is the worst idea ever...when the law was first passed in the mid 90's (some kind of redevelopement act because the US was embarrassed that the USVI were the shittiest most dangerous islands in the caribbean) about 100 hedge fund managers moved down there. the problem was the IRS was hoping a bunch of tards would move down and sell t shirts and mixed drinks tax free and were pissed in a major way when a bunch of hedge funds showed up and stopped paying taxes on 100's of millions annually. so the audits began and from what i understand were pretty much not stop until sometime last year...thats right for 12 or 13 years these guys were harrassed daily and could not be touched because they followed the rules...naturally the rules were super vague because the US govt wrote them...there was no requirement to hire a certain number of islanders or make certain charitable contributions or have your kids in their shitty dangerous schools or have an island drivers license....now if you think america is not a communist country then you will be shocked to learn that in 2008 they changed this law RETROACTIVELY to include all sorts of crazy things which nobody did. then the IRS swoopped in and took every f ing dime those hedge funds ever made...taxes first , them penalties and fees and the ones who couldnt pay are battling prison sentences now...simple lesson here...dont you dare try to leave the plantation you f***ing Ni*****! So you want to try it now?! they will club you in the head and get rid of the body man!