A new bill which seeks to eliminate customs duties in the U.S. Virgin Islands, was approved by the territory’s finance committee late last month. As of November 17, the bill as amended by territory senators, says that goods can enter the USVI free of customs duties. The debated fees equal about $12 million annually, which based on funds retained by Customs and Border Protection (CBP), cost nearly that amount to collect.
Here’s a quick breakdown of the customs duty debate in the territory:
- The Revised Organic Act is a federal law that gives the territory the ability to tax incoming goods up to six percent in customs duties.
- Federal Customs and Border Protection (CBP) collects customs duties in the territory. They take part of the funds collected to cover their costs. Post 9/11, after the creation of the The Department of Homeland Security in 2003, CBP began keeping more than 90 percent of the customs duties collected in the USVI.
- In December 2014, then Governor John deJongh Jr., created a memorandum of agreement with Customs and Border Protection trying to resolve this issue. According to territory officials, it has gone largely ignored. The territory has only seen $1 million in customs duties from CBP since the 2014 memo was signed by both parties, losing 90 percent to the federal entity in 2015 and receiving no funds thus far in 2016 (in which only 20 days remain).
- The St. Croix Chamber of Commerce opposes this new legislation. The group points out that the federal government could remove the convenience of local customs clearance all-together. Proponents of the bill counter that federal funding covers the costs of CBP services in other locations.
One perk of island life is that nearly all our taxes stay right here in the U.S. Virgin Islands. So while we pay mirror taxes for things like income tax, the money stays right in our backyard, versus going to the federal government. If you’re ready to make St. Croix or St. Thomas your home, contact Chris and Kerri Hanley, the experts on Virgin Islands real estate. Download their free St. Croix Event Guide to find the perfect time for a long visit: