HR-858 : Still Just a Bill

The "Restore Economic Vitality and Investment in the Virgin Islands Act" (H.R. 858), also known as the "REVIVE VI Act," proposes to amend the Internal Revenue Code of 1986. Its primary purpose is to modify how "global intangible low-taxed income" (GILTI) is determined by:

• Excluding certain income, referred to as "qualified Virgin Islands services income," from the calculation of GILTI for specific U.S. shareholders.

Key definitions under the Act include:

• Qualified Virgin Islands services income: This refers to gross income that is:
  • Compensation for labor or personal services performed in the Virgin Islands by a corporation formed under Virgin Islands law.
  • Attributable to services performed from within the Virgin Islands by individuals for the benefit of the corporation.
  • Effectively connected with conducting a trade or business within the Virgin Islands.
• Specified United States shareholder: This includes:
  • An individual, trust, or estate.
  • A closely held C corporation that acquired its direct or indirect equity interest in the foreign corporation before December 31, 2023.

The bill also mandates that the Secretary of the Treasury prescribe regulations to prevent the abuse of these new provisions. The amendments would apply to taxable years of foreign corporations beginning after the date of enactment of this Act.