By the BF Staff
From the January/February 2022 Issue
It shouldn’t take much to convince anyone that the U.S. Virgin Islands might be a great location for business expansion or relocation. After all, these islands—Saint Croix, Saint John and Saint Thomas—offer paradise: warm tropical breezes, endless beaches and friendly residents, many of whom desire and are well-qualified to work for a new company.
But just in case, Wayne L. Biggs, Jr., the chief executive officer of the Virgin Islands Economic Development Authority (USVIEDA), has a few other reasons why the pristine group of islands, approximately 1,100 miles southeast of Miami, Florida, and just east of Puerto Rico, might be something growing companies want to consider.
The easy reasons start with the simple fact that the U.S. Virgin Islands—with a population of around 88,000 across the three islands—are a U.S. territory, abiding by U.S. laws and courts, using American currency and with an English-speaking population. Plus, no passport is required when traveling to and from other U.S. jurisdictions.
There are many other factors. For example, the U.S. Virgin Islands feature robust business tax incentives, offer an educated and trained workforce of more than 43,000 individuals and have access to key markets in the Caribbean basin, South America and North America, totaling nearly one billion consumers.
According to Biggs, the islands offer modern office facilities and industrial park sites, container cargo seaports and air cargo facilities and two international airports with service from many major carriers. There is also an accredited university with campuses on St. Thomas and St. Croix. The territory is also exempt from the Jones Act, and its “Made in the USA” designation offers great benefits to manufacturers.
Still, Biggs and the USVIEDA, seeking to leave nothing to chance, launched Vision 2040, a long-term economic plan for the territory.
“The USVIEDA embarked on ‘Vision 2040’ to create a long-term road map for the territory for future economic growth and success,” Biggs explained. “Outside of the Comprehensive Economic Development Strategy (CEDS) that is prepared approximately every five years, the U.S. Virgin Islands had never embarked on a long-term economic plan for the territory.
“Vision 2040 was an exercise to do this needed long-term planning,” he continued. “Vision 2040 is a community collaborative 20-year economic plan that looked at the assets of the territory and how the territory can position itself for economic growth and success of the next generations. The plan identified eight aspirational goals and eight target industry sectors that were identified as potential growth sectors that the territory could position itself to take advantage of by developing the infrastructure and workforce for these sectors now.”
Biggs noted that targeted industry sectors include agribusiness, coastal/ocean resources, health sciences, light manufacturing, professional/technical services, renewable energy, research development, and Virgin Island-style tourism.
“With 115 initiatives—including short, medium, and long-term—the public, private, and non-profit sector collaboratively are poised to bring the USVI to economic prosperity by 2040,” Biggs said.
The U.S. Virgin Islands are also home to unique tax incentives that help make the territory more attractive to businesses.
“Tax incentives play a key role in our strategy in attracting business investment into the U.S. Virgin Islands as we are the only jurisdiction under the U.S. flag that can currently offer qualified corporations doing business in the U.S. a 90% reduction of their corporate federal income tax liability, and residents a 90% reduction on the dividends or pass-through income from approved businesses activities,” Biggs explained.
This is made possible as a result of the congressionally-approved “mirror” tax system the territory operates under and the fact there are no other state or local income taxes. “The tax reductions allow businesses to be more profitable and reinvest into their business for growth, and the personal income tax reduction allows for larger shareholders/owners direct benefit,” Biggs added.
The South Shore Trade Zone, (“SSTZ”), free trade zone, on St. Croix will allow companies that are looking for alternative markets in the Caribbean, Central America, and Latin America to take advantage of being located in a U.S. jurisdiction with close access to the markets. The trade zone already has the shipping assets—deep water container port, international airport with cargo facilities and 10,000-foot runway, and private delivery companies all within the zone area.
Additionally, the zone allows for manufacturing and/or assembly of products to be labeled “Made in the USA” based on the value added. Thereby, companies can bring in foreign components into the free trade zone tax free, assemble them into the final product, label them as U.S. products based on the value added, and ship them to U.S. ports without having to pay custom duties and/or foreign import taxes.
Being exempt from the Jones Act, which allows foreign flagged vessels to transport goods from the U.S. Virgin Islands directly to other U.S. ports, is also a major selling point for the territory.
In the end, Biggs says that the U.S. Virgin Islands pretty much has it all. “You should consider the U.S. Virgin Islands as a place for your business location as you would be establishing your company in a U.S. territory with robust business tax incentives,” he said. “Being in a U.S. jurisdiction, your intellectual property is protected by U.S. laws and courts.
And, of course, the standard of living in a relaxed Caribbean island with tropical weather patterns, with opportunities for business investment, is still just a quick direct-flight to Miami, Washington, DC or New York, to name a few.
