Sept. 18, 2006 – The U.S. Treasury Department on Monday clarified a provision in its code concerning e-commerce income.
"This is a big break for the territory," said David Zumwalt, director of the V.I. Research and Technology Park.
The issue is extremely complicated, but Zumwalt said it essentially says that businesses located in the territory pay taxes in the Virgin Islands even though their customers are located elsewhere.
The territory's Economic Development Commission tax benefits program has been under the gun for the past couple of years after the Treasury Department tightened its rules regarding residency and source of income, a mandate from the U.S. Congress.
This followed allegations of abuse by some EDC program recipients.
Zumwalt said ever since, government officials have worked hard to restore the program. He said the clarification would enhance the Research and Technology Park's ability to attract companies to its facility.
According to Auguste E. Rimpel Jr., chairman of the Research and Technology Park board of directors, the clarification allows the park to leverage the territory's assets and resources to broaden the economy.
"It adds yet one more noteworthy reason for technology-based businesses to consider the USVI in any corporate relocation or expansion plans," Rimpel said in a news release Monday.
The Research and Technology Park, a venture of the University of the Virgin Islands, is expected to serve as a center for e-commerce and technology, and to boost the territory's economy.
The Treasury's clarification appears as Notice 2007-76 in the Internal Revenue Bulletin 2006-38 issued Monday.
The full clarification is available at www.irs.gov/businesses/lists/0,,id=98230,00.html. Click on 2006-38. The pertinent information is on pages 459 and 460.
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