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U.S. VIRGIN ISLANDS EXPORT CORPORATION (VIEXCO)

BASED ON THE EXPORT EXCEPTIONS AND EXEMPTIONS UNDER THE IRC, THIS NEW EXPORT TAX BENEFIT VEHICLE CREATED BY EXPORT ASSIST IS STRUCTURED TO HELP YOU BRING TRAPPED SECTION 956 FUNDS INTO THE U.S. WITHOUT SUBPART F EXPOSURE AND TO USE FOREIGN TAX CREDIT CARRYFORWARDS.

For more than 20 years, Export Assist has been incorporated in the U.S. Virgin Islands (USVI) and operating in St. Thomas. Our staff will incorporate the VIEXCO within 24 to 48 hours and perform all implementation, annual management and general accounting services necessary for operation and compliance monitoring. Export tax benefits only begin upon incorporation.

VIEXCO Tax Benefits

After years of researching the IRC, sponsoring legislation and having major accounting and legal firms review its findings, Export Assist has created the U.S. Virgin Islands Export Corporation (VIEXCO) which offers exporters the following tax and treasury benefits:

  • Use of trapped Section 956 funds in the U.S. without Subpart F exposure
  • Use of foreign tax credit carryforwards
  • Dividends taxed at the 15% rate for individual shareholders
  • Unlimited deferral
  • Low-cost working capital for export growth
  • Lower effective tax rates
  • Increased cash flow
  • Virtually no taxation.

Plus, by performing its export economic activities in the USVI, the exporter is able to stay within the jurisdiction of the United States, including its Federal Court, banking laws and mirrored tax code.

For a preliminary analysis of your VIEXCO benefits, please complete our Exporter Profile Form. Upon receipt, we will prepare your confidential, FREE VIEXCO Tax Benefit Report within 3-4 days. To proceed with the VIEXCO, a business plan will be prepared by Export Assist that includes the organization plan, analysis of the export-related economic activities to be transferred to the VIEXCO, financial statements and projections, and implementation process. Prior to incorporation, a Section 482 transfer pricing study must be obtained from a third party provider.

For more information, please contact Wendy Weir, Chief Operating Officer, at 800-894-8366 or wweir@exportassist.com.

Background

The U.S. Virgin Islands Export Corporation (VIEXCO) structure was created under legislation sponsored by Export Assist and signed into law by the U.S. Virgin Islands governor on December 29, 2001 (Virgin Islands Code, Title 13, Chapter 12). This legislation also established:

  • an annual business license fee of $100
  • a flat annual franchise tax fee of $300
  • no corporate income tax
  • no gross receipts tax
  • no graduated franchise tax

thereby subjecting the corporation to virtually no taxation.

Structure

The VIEXCO is a controlled foreign corporation (CFC) under U.S. Virgin Islands legislation that has a single class of stock with a minimum par value of $1,000. It must only include qualified U.S. export property and pass the U.S. export destination tests. It can be structured on a services or a buy/sell basis and it can perform finance functions like a bank.

VIEXCO Ownership

Private Exporter
With a privately-held exporter, the VIEXCO can be owned by either the shareholders of the corporation or by the shareholders’ IRA. When the VIEXCO is owned directly by the shareholders, its income qualifies as Subpart F and is subject to reduced taxation. When distributed as dividends, currently taxed at the 15% rate, this income is exempt from additional tax as Previously Taxed Income (PTI). When the VIEXCO is owned by the shareholders’ IRA, the dividends are not subject to tax when received by the IRA due to its non-profit status. Export Assist has obtained an opinion letter from a leading law firm that endorses IRA ownership of the VIEXCO.

Public Exporter
With a publicly-traded exporter, the VIEXCO is owned directly by the exporter.

VIEXCO Activities

Services
This VIEXCO consists of services and finance activities performed outside of the United States on behalf of the U.S. exporter. The VIEXCO earns revenue by contracting with the exporter to receive a services fee for the performance of export economic activities based on a Section 482 transfer pricing study. Income could be used for financing export working capital, the purchase of invoices for shipments made to overseas locations, and sales to unrelated international buyers.

Buy/Sell
Based on a Section 482 transfer pricing study, the buy/sell VIEXCO buys export property from a U.S. company, performs all export economic activities, then onsells the export property to unrelated international buyers. The VIEXCO can also generate revenue by financing export working capital, purchasing invoices for international shipments made to overseas locations, and funding short- and medium-term export transactions, such as sales to unrelated buyers and capital equipment loans.

 
   
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