According to a press release from Lt. Gov. Osbert Potter, the Office of the Lieutenant Governor — Division of Corporations and Trademarks is currently undergoing a massive project to computerize the registration and franchise tax payment processes. To accommodate the challenges of the conversion, the public is alerted to the following two policy changes, effective immediately:
Certificates of Good Standing
On a temporary basis, all registered entities in the U.S. Virgin Islands seeking a Certificate of Good Standing will be issued a temporary Conditional Certificate of Good Standing. The conditional certificate of is not conclusive of the payment of franchise taxes and the filing of annual records. The “conditional” designation simply means that the status of an entity’s registration is “valid assuming all conditions are met.”
Once the computerization of business entities is complete, the division will open a “look back” period where it determines the outstanding tax and reporting obligations, if any, of all registered entities. Entities found to be deficient will have the Conditional Certificate of Good Standing revoked in the system and will receive a demand for compliance. Entities that are truly in good standing will have their statuses changed in the system to reflect this fact.
An Act signed into law by the governor on Jan. 29, 2018, obligates all registered entities to observe new franchise tax calculations, and it increases the base fee from $150 to $300, effective June 30.
While the franchise tax is easily calculable for those entities formed after June 30 that can provide a financial report ending Dec. 31, by law the Division of Corporations and Trademarks must collect franchise taxes as part of the registration fee for entities formed between Jan. 1 and June 30. U.S. Virgin Islands law states that “a full year’s tax shall be collected for any portion of any tax year in which the corporation was in existence after Dec. 31, 1993.”
It also states, “Effective Jan. 1, 1989, the franchise tax required by this section shall be filed and paid… on or before June 30 of each calendar year; however, the first year’s estimated tax shall be collected from any corporation … in advance, at the time of the corporation’s initial incorporation or qualification to do business in the Virgin Islands.”
Failure to remit the annual report and franchise taxes due by June 30, 2018, will result in the system placing a deficiency finding against a registered entity, with a subsequent demand for payment being issued to the entity found to be deficient.
For more information, contact the Division of Corporations and Trademarks at 776-8515 on St. Thomas or 773-6449 on St. Croix.