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Committee approves bill to clarify gross-receipts tax applies to contractors doing work in USVI
Summary
The Committee on Economic Development and Agriculture voted April 16 to forward legislation (Bill 36‑0063) clarifying that gross‑receipts taxes apply to contractors performing work in the U.S. Virgin Islands regardless of the contractors’ physical location. The committee approved the measure for referral to Rules and Judiciary.
The Committee on Economic Development and Agriculture voted April 16 to approve legislation clarifying that gross‑receipts and excise requirements apply to contractors performing work in the U.S. Virgin Islands regardless of whether the contractor is physically located in the territory.
Sponsor Senator Clifford A. Joseph Sr. framed Bill 36‑0063 as a necessary correction to ensure that entities that contract for territory-funded projects pay the gross‑receipts tax the law intends to capture. “All businesses doing work in our territory must pay their fair share,” the sponsor told the committee when he introduced the measure.
The Bureau of Internal Revenue testified in support of the clarifying language. Director Joel Ailey explained that the bureau’s interpretation must include income produced by entities that are formed or headquartered outside the territory when their activities produce economic gain in the U.S. Virgin Islands. The bureau described the tax as a non‑deductible charge applied at each stage of commerce (general contractors, subcontractors and suppliers) and told the committee clarifying language would reduce administration and collection ambiguity.
Committee members discussed potential revenue implications for recovery and public‑works spending. Office of Management and Budget testimony during the hearing noted the territory may spend large sums on federally supported reconstruction and professional services; the committee heard examples to show how a small rate applied to large program flows can represent material revenue for the territory. The bill was adopted by the committee and forwarded to the Committee on Rules and Judiciary for further action with a favorable recommendation.
Formal committee action: The committee moved, seconded and recorded a favorable committee vote and directed the measure to Rules and Judiciary. The committee reported the motion passed and listed the item as forwarded for further consideration.
