United States Virgin Islands to be Offering Significant Tax Breaks to eCommerce Companies

07/06/2009

The United States Virgin Islands are already known for their gorgeous white sand beaches, soft breezes, and blue skies, but now the islands may also be known for the tax breaks they provide for eCommerce companies. In fact, companies that offer digital products or services using St. Croix based servers may be able to save up to 90 percent on their state and federal income taxes. This tax break will allow companies who now pay a tax rate of 40 percent to pay as little as 4 percent.

The U.S. Virgin Islands Technology Park located in St. Croix offers solutions for eCommerce companies who are interested in saving a significant amount on their state and federal taxes. The good news is that they can offer as much broadband network capacity as needed due to an undersea fiber optic cable which now connects the technology center to the mainland. As this is the very same Global Crossing Network used by the United States National Security Agency, the technology center is fully certified.

The United States Virgin Islands actually have a history of giving tax breaks to manufacturing companies, so it is only natural that they would now extend these benefits to eCommerce companies who offer digital products and services based on the Web. A recent ruling by the Internal Revenue Service declared that online retailers dealing in software or Web based services from the U.S. Virgin Islands would pay their income taxes directly to the Virgin Islands, not the United States Internal Revenue Service in an attempt to attract more businesses to the area. Companies that have placed their servers in the industrial park will qualify for the 90 percent deduction in their corporate tax break, a rate which will be in effect for 15 years.

The tax breaks have been publicized very recently by eCommerce Island, a marketing company that specializes in advertising the benefits of locating in the U.S. Virgin Islands Research and Technology Park. They have already set up a group of service providers to handle payment processing and Web hosting which includes companies such as Jetpay and Adveniat Corp. In order to qualify for these new tax breaks, there are certain stipulations that must be met, such as setting up servers in the industrial park. They are also required to set up a subsidiary in the U.S. Virgin Islands. These two rules in particular help to make sure that transactions conducted on these servers do indeed qualify for the tax break.

Several companies have already signed up to receive these tax breaks and there are already others in line. While not all companies would benefit from taking these measures, there are companies whose benefits would certainly outweigh the costs. As Switzerland, Singapore, and other companies that offer tax breaks have been subjected to scrutiny lately, the U.S. Virgin Islands offer the only country where eCommerce companies can enjoy huge tax breaks and still follow U.S. commercial law.

For more insight visit eCommerce Development Services