The USVI attracts many businesses to its shores by offering generous tax incentives to qualifying companies that are approved by the Economic Development Commission (“EDC”). However, fewer people seem to be aware that those same benefits—90% reduction in income tax liability; 100% exemption on real property taxes, gross receipts taxes, and excise taxes, and a reduction in customs duties—are available to technology-based businesses through partnership with the University of the Virgin Islands Research and Technology Park the (“Technology Park” or “Park.”)
A memorandum of understanding between the EDC and the Technology Park states that before a technology company can be considered for benefits by the EDC it must first submit an application to be a member of the Park. The purpose of this is to help foster a synergy between the Park companies and to partner with the University in creating a sustainable and educated workforce for the technology sector.
The application and approval processes for the Park, while rigorous, are less formal than the EDC application processes. This can result in reduced start-up time for new companies. Additional incentives include a waiver of the application fee if an applicant is represented by local counsel, the second largest concentration of bandwith in the Western Hemisphere, companies are not required to house offices in the Park or even on St. Croix to be considered “tenants” of the Park, and companies are not required to hire ten employees (which the EDC mandates) if their needs do not require that level of hiring or if they have trouble identifying qualified workers. To put it more simply, the Park offers greater flexibility than EDC companies might be used to.
On the other hand, Technology Park applicants are required to pay a certain percentage of gross receipts to the Park each year, as well as offering the Park a small equity interest in their company.
Certainly for technology-based businesses looking to make an investment in a location where they can receive significant tax savings, finding out more about the UVI Research and Technology Park would be a worthwhile endeavor.
Attorney Daniel J. Gravel is Chair of the Corporate Tax & Estate Planning Practice Group at BoltNagi PC. BoltNagi PC is a full service business law firm in St. Thomas, Virgin Islands