Agriculture is a small but critically important industry in the U.S. Virgin Islands. Agriculture is only a small portion of the territory’s gross domestic product (GDP); roughly 97 percent of our food is imported from elsewhere. This leaves the territory vulnerable to food shortages in case of any global food crisis. The government wants to fix this.
The U.S. Virgin Islands offers many financial incentives for individuals engaged in agricultural activity. These incentives are designed to protect agriculture in the territory and boost profits for farmers and other agricultural workers and business owners. Through its Economic Development Authority, the U.S. Virgin Islands encourages agricultural businesses to start, grow or relocate to the territory. The island of St. Croix is the agricultural center of the territory.
Below are some of the benefits and tax exemptions offered to agricultural businesses.
If you engage in agricultural activity, you qualify for a subsidy of up to 90 percent of your income tax that was derived from agriculture. If you are not otherwise disqualified under any applicable law, you may elect to have your income tax liability reduced on a current basis in an amount equal to the subsidy benefit and in lieu of such subsidy payment.
Gross receipt taxes
Revenues from tariffs from agriculture are exempt from gross receipts taxes. Anyone engaged in agriculture is exempt from paying the Government of the Virgin Islands any gross receipt taxes on sales of products derived from the agricultural activities.
Real estate ad valorem taxes
A property owner can receive a tax credit of 95 percent of the property taxes levied by the Tax Assessor against the total area of real property, including structures and improvements, used actively and solely for agricultural or horticultural purposes. Even if you don’t own the land, your improvements would only be taxable at 5 percent of the real property taxes levied by the Tax Assessor against the structures and improvements.
Excise taxes and customs duties
Any agriculture building materials, supplies, equipment and implements brought into the Virgin Islands are exempt from excise taxes. Anyone engaged in agriculture does not have to pay the government for these items if they are used for agricultural operations.
Franchise taxes and license fees
Anyone engaged in agricultural activities is exempt from paying the government any franchise taxes and license fees directly related to and arising from agriculture operations. To enjoy this benefit, you are required to pay a $1 fee to the Department of Licensing and Consumer Affairs for the purpose of doing business in the territory.
For more information about how a tax benefits agricultural business enjoy in the U.S. Virgin Islands, contact an experienced attorney today.
Tom Bolt is Managing Attorney of BoltNagi PC, a full-service business law firm on St. Thomas U.S. Virgin Islands.