Sponsors (9)
The bill gives targeted, time‑limited tax relief and certainty to certain U.S. shareholders with Virgin Islands service corporations while directing anti‑abuse rulemaking, at the cost of reduced federal revenue, increased incentives for profit‑shifting, and unequal treatment based on acquisition date.
U.S. shareholders of Virgin Islands–organized service corporations who qualify will have lower GILTI inclusion, reducing their immediate U.S. tax burden.
Directing Treasury to issue anti‑abuse regulations may limit aggressive tax planning around the exclusion, reducing opportunities for abuse.
Owners who held interests before Dec 31, 2023 receive a narrow, time‑limited benefit that provides tax certainty for those existing owners.
Excluding Virgin Islands services income from GILTI will reduce U.S. tax revenue, potentially increasing the federal deficit or shifting tax burdens to others.
The carve‑out may incentivize profit‑shifting or relocation of service activities to the Virgin Islands to exploit the exclusion, creating enforcement challenges and broader avoidance opportunities.
Limiting the benefit to owners who acquired interests before Dec 31, 2023 creates unequal treatment between otherwise similar taxpayers based solely on acquisition date.
Based on analysis of 2 sections of legislative text.
Excludes qualifying compensation for services performed in the Virgin Islands from GILTI for specified U.S. shareholders, reducing those shareholders' GILTI inclusion.
Introduced January 31, 2025 by Ron Estes · Last progress January 31, 2025
Excludes certain compensation for services performed in the Virgin Islands from the GILTI (Global Intangible Low-Taxed Income) calculation for specified U.S. shareholders, so that qualifying Virgin Islands services income is not counted as GILTI. The Treasury must issue implementing and anti-abuse rules; the change applies to foreign corporations' taxable years beginning after enactment and to the U.S. shareholders whose tax years include those foreign corporation years.