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REVIVE VI Act
2/28/2025, 8:23 AM
Summary of Bill HR 858
The GILTI provision was originally introduced as part of the Tax Cuts and Jobs Act of 2017, in an effort to prevent multinational corporations from shifting profits to low-tax jurisdictions. However, there have been concerns raised about the impact of this provision on businesses operating in the Virgin Islands, as it could potentially result in double taxation for income earned in that territory.
By amending the calculation of GILTI to exclude income derived from services performed in the Virgin Islands, this bill aims to address these concerns and ensure that businesses operating in the territory are not unfairly penalized. This change would help to provide clarity and consistency in the tax treatment of income earned in the Virgin Islands, while still maintaining the overall integrity of the GILTI provision. Overall, Bill 119 HR 858 seeks to make targeted adjustments to the tax code in order to promote fairness and efficiency in the taxation of global intangible low-taxed income.
Congressional Summary of HR 858
Restore Economic Vitality and Investment in the Virgin Islands Act or the REVIVE VI Act
This bill allows certain U.S. shareholders of a controlled foreign corporation to exclude qualified Virgin Islands service income from the calculation of global intangible low-taxed income (GILTI) for federal tax purposes. It also requires the Internal Revenue Service (IRS) to issue guidance on the exclusion. (Some limitations apply.)
Under current law, U.S. shareholders that own 10% or more of a controlled foreign corporation are required to include in gross income the GILTI of the controlled foreign corporation. The calculation of GILTI is based, in part, on the controlled foreign corporation’s tested income (the controlled foreign corporation’s gross income excluding certain types of income and dividends).
Under the bill, specified U.S. shareholders (individuals, trusts, estates, and certain closely-held C corporations) may exclude qualified Virgin Islands service income from a controlled foreign corporation’s gross income for purposes of calculating the controlled foreign corporation’s tested income.
The bill defines qualified Virgin Islands service income as gross income that is
- compensation for labor or personal services performed in the Virgin Islands by a corporation formed under Virgin Islands laws,
- attributable to services performed in the Virgin Islands by individuals for the benefit of such corporation, and
- effectively connected with the conduct of a trade or business in the Virgin Islands.
Finally, the bill requires the IRS to issue guidance on the exclusion of qualified Virgin Island service income from the GILTI calculation.
