YourVoice.Now Summary
Corporate BenefitsUS Virgin Islands residents who own local companies would avoid being taxed as US shareholders of a foreign corporation.
Corporate Benefits
- US shareholder treatment — Bona fide Virgin Islands residents excluded for local corporations
- Federal reporting of local corporate earnings — Reduced for qualifying Virgin Islands owners
The details
Residents of the US Virgin Islands who own local companies would get a tax change. Under current law they can be treated as US shareholders of a foreign corporation. That treatment can force them to report the company's earnings on a US return before any money is paid out. Bona fide Virgin Islands residents would be excluded from that rule. The exclusion applies only to corporations organized under Virgin Islands law. It also applies only where dividends from the company count as Virgin Islands source income. Comparable treatment already exists for some other US territories. The change would cover corporate tax years beginning after December 31, 2024.
Congressional Summary
Territorial Tax Parity and Fairness Act This bill excepts individuals who are bona fide residents of the Virgin Islands from including in gross income for U.S. federal tax purposes subpart F income received from certain corporations if such income may be sourced to the Virgin Islands.Under current law, a U.S. shareholder of a controlled foreign corporation generally is required to include in gross income their pro rata share of dividends, interest, rent, royalties, and certain other types of income of the controlled foreign corporation (collectively known as subpart F income). A U.S. shareholder is a U.S. person (citizen, resident, domestic partnership or corporation, trust, or estate) that owns a certain percentage of stock in the controlled foreign corporation.However, under current law, the definition of a U.S. person does not include individuals who are bona fide residents of the U.S. territories of Puerto Rico, Guam, America Samoa, and the Northern Mariana Islands who receive subpart F income from controlled foreign corporations that meets certain requirements for being sourced to the territory or being connected to or derived from a trade or business in the territory.This bill expands the exceptions from the definition of a U.S. person for purposes of the subpart F income tax rules, to include individuals who are bona fide residents of the Virgin Islands and receive subpart F income from a controlled foreign corporation organized under the laws of the Virgin Islands if the subpart F income may be sourced to the Virgin Islands.
Legislative Subjects
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2025-01-13
- Date Added
- 2026-07-24
- Source
- Congress.gov →
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