US Virgin Is.: Living There - Tax Issues
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INDIVIDUAL TAXATION
US citizens and US permanent residents are taxed on their worldwide income. Married couples may be taxed jointly or separately.
INCOME TAX
Income is taxed at progressive rates, the same rates as the federal income tax rates in mainland USA. Taxable income is computed by deducting income generating expenses from the gross income.
FEDERAL INCOME TAX 2008 FOR |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$16,050 | 10% |
| US$16,050 – US$65,100 | 15% on band over US$16,050 |
| US$65,100 - US$131,450 | 25% on band over US$65,100 |
| US$131,450 - US$200,300 | 28% on band over US$131,450 |
| US$200,300 - US$357,700 | 33% on band over US$200,300 |
| Over US$357,700 | 35% on all income over US$357,700 |
| Source: Global Property Guide | |
FEDERAL INCOME TAX 2008 |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$11,450 | 10% |
| US$11,450 – US$43,650 | 15% on band over US$11,450 |
| US$43,650 - US$112,650 | 25% on band over US$43,650 |
| US$112,650 - US$182,400 | 28% on band over US$112,650 |
| US$182,400 - US$357,700 | 33% on band over US$182,400 |
| Over US$357,700 | 35% on all income over US$357,700 |
| Source: Global Property Guide | |
FEDERAL INCOME TAX 2008 FOR SINGLE INDIVIDUALS |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$8,025 | 10% |
| US$8,025 - US$32,550 | 15% on band over US$8,025 |
| US$32,550 - US$78,850 | 25% on band over US$32,550 |
| US$78,850 - US$164,550 | 28% on band over US$78,850 |
| US$164,550 - US$357,700 | 33% on band over US$164,550 |
| Over US$357,700 | 35% on all income over US$357,700 |
| Source: Global Property Guide | |
FEDERAL INCOME TAX 2008 FOR |
|
| TAXABLE INCOME, US$ | TAX RATE |
| Up to US$8,025 | 10% |
| US$8,025 - US$32,550 | 15% on band over US$8,025 |
| US$32,550 - US$65,725 | 25% on band over US$32,550 |
| US$65,725 - US$100,150 | 28% on band over US$65,725 |
| US$100,150 - US$178,850 | 33% on band over US$100,150 |
| Over US$178,850 | 35% on all income over US$178,850 |
| Source: Global Property Guide | |
GROSS RECEIPTS TAX
Every individual doing business in the islands are liable to pay the 4% gross receipts tax in addition to the income tax. The first US$5,000 monthly income is exempted from gross receipts tax if annual gross receipts are less than US$150,000.
If annual gross receipts are more than US$120,000, the gross receipts tax is due monthly by the 30th day of the following month and the applicable form would be Form 720-VI. Otherwise (if annual gross receipts is less than US$120,000), an annual return on Form 720-B must be filed by the 30th day following the last day of the year concerned. Even if rental income does not exceed the US$5,000 monthly exemption, Form 720-B should still be filed showing application of the exemption.
Capital gains on the sale of the rental property will not be subject to the gross receipts tax.
CAPITAL GAINS TAX
Income from the sale of real property is always considered “effectively connected income”. Capital gains on real property held for more than one year are generally taxed at a maximum rate of 15%. Capital gains received by taxpayers within the 10% and 15% tax brackets are not taxed as of 01 January 2008.
Taxable capital gains are calculated by deducting the “adjusted basis of the property” from the “amount realized from selling the property”. The amount realized from selling the property is computed by deducting selling expenses from the gross selling price. The adjusted basis of the property is the original cost of the property plus expenses deemed to have increased its value (i.e. capital improvements), less items which have notionally decreased its value (i.e. depreciation).
PROPERTY TAX
Property Tax
The US Virgin Islands currently imposes a real property tax at 1.25% of the property’s assessed value. The property’s assessed value is 60% of its actual value or fair market value. Thus, the effective tax rate is 0.0075% of the property’s fair market value.
However, a new rate structure is being proposed wherein applicable tax rates vary depending on the classification of the property:
PROPOSED PROPERTY TAX |
|
| PROPERTY CLASSIFICATION | |
| Residential property | |
| Vacant land | |
| Commercial property | |
| Timeshare property | |
US Virgin Is. - more data and information
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