REVIVE VI Act
- Bill Number
- H.R. 858
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-01-31: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-30T14:55:46Z
AI-Generated Summary
Purpose
The "Restore Economic Vitality and Investment in the Virgin Islands Act" (REVIVE VI Act) aims to encourage economic growth in the U.S. Virgin Islands (VI) by excluding certain income from services performed there from the federal tax calculation known as Global Intangible Low-Taxed Income (GILTI). GILTI is a provision in U.S. tax law that taxes certain foreign earnings of U.S.-controlled companies to prevent profit shifting to low-tax jurisdictions.
Key Provisions
- Exclusion from GILTI Calculation: The bill amends Section 951A of the Internal Revenue Code (IRC) to exclude "qualified Virgin Islands services income" from the GILTI computation for eligible U.S. shareholders.
- Qualified Virgin Islands Services Income: This includes gross income from labor or personal services (e.g., consulting, professional work) performed entirely within the VI by a corporation organized under VI laws. The services must be done by individuals located in the VI for the benefit of that corporation and must be connected to a trade or business conducted in the VI.
- Eligible Shareholders (Specified U.S. Shareholders): The exclusion applies to U.S. shareholders who are individuals, trusts, estates, or "closely held C corporations" (small corporations with concentrated ownership, as defined in IRC Section 469). For corporations, the equity interest in the VI company must have been acquired before December 31, 2023.
- Regulatory Authority: The U.S. Secretary of the Treasury is directed to issue regulations or guidance to implement the exclusion and prevent abuse, such as artificial arrangements to claim the benefit improperly.
- Effective Date: Applies to taxable years of foreign corporations beginning after the bill's enactment, and corresponding taxable years of U.S. shareholders.
Significant Changes to Existing Law
- Prior to this bill, income from services performed in the VI could be included in a U.S. company's GILTI calculation, subjecting it to U.S. taxation even if earned abroad.
- The amendment adds a new subclause (VI) to IRC Section 951A(c)(2)(A)(i), creating a targeted carve-out for VI services income. This is the first such specific exclusion for territorial services income in the GILTI rules, building on existing territorial tax incentives but narrowing it to pre-2024 investments for corporate shareholders to limit retroactive claims.
Potential Impacts
- On Government Agencies: The IRS and Treasury Department will need to develop new rules and oversight to enforce the exclusion, potentially increasing administrative workload. It may lead to reduced federal tax revenue from affected U.S. shareholders.
- On Citizens and Businesses: U.S. individuals, trusts, estates, and small corporations with VI operations could see lower tax bills on service income, freeing up capital for reinvestment. VI residents and businesses may benefit from increased economic activity, job creation, and investment in services sectors like tourism or professional services.
- On International Relations: Minimal direct impact, as the VI is a U.S. territory. However, it could enhance the VI's competitiveness as a business hub compared to other low-tax foreign jurisdictions, indirectly affecting U.S. tax policy toward territories.
Main Stakeholders Affected
- U.S. Shareholders: Primarily individuals, family trusts/estates, and closely held C corporations with pre-2024 stakes in VI service companies, who gain tax relief.
- Virgin Islands Businesses and Residents: VI-incorporated companies providing services and their employees, who may see growth from attracted investment.
- U.S. Government: Treasury and IRS, responsible for implementation and potential revenue effects.
- Broader Taxpayers: Indirectly affected through possible shifts in federal tax collections.
Notable Legal, Constitutional, or Political Implications
- Legal: The bill introduces a narrow, time-limited exclusion to avoid broad loopholes, with anti-abuse regulations to ensure compliance with IRC principles. It aligns with existing territorial tax mirrors (where VI taxes mirror U.S. rules) but carves out GILTI specifically, potentially inviting challenges if seen as discriminatory against post-2023 investors.
- Constitutional: No major issues, as Congress has plenary authority over territories under the U.S. Constitution (Territorial Clause). It promotes equal treatment for territorial economic development without violating equal protection.
- Political: Supports bipartisan efforts (introduced by members from both parties) to aid VI recovery from economic challenges like hurricanes and tourism declines. It signals targeted tax relief for U.S. territories, possibly setting precedent for similar incentives in other areas like Puerto Rico, amid debates on territorial equity in federal tax policy.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (8)
Del. Plaskett, Stacey E. [D-VI-At Large], Rep. Hern, Kevin [R-OK-1], Rep. Sewell, Terri A. [D-AL-7], Rep. Feenstra, Randy [R-IA-4], Rep. Schneider, Bradley Scott [D-IL-10], Rep. Miller, Carol D. [R-WV-1], Rep. Miller, Max L. [R-OH-7], Rep. DelBene, Suzan K. [D-WA-1]
Recent Actions
- 2025-01-31: Referred to the House Committee on Ways and Means.
- 2025-01-31: Introduced in House
- 2025-01-31: Introduced in House
Bill Versions
- Restore Economic Vitality and Investment in the Virgin Islands Act — issued 2025-01-31 — PDF (4 pages)