GOVERNMENT OF 
THE VIRGIN ISLANDS OF THE UNITED STATES 
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VIRGIN ISLANDS BUREAU OF INTERNAL REVENUE 
 
 
6115 Estate Smith Bay – Suite 225 
4008 Estate Diamond Plot 7 B 
St. Thomas VI  00802 
Christiansted VI  00820-4421 
Phone: (340) 715-1040 
                                  Phone: (340) 773-1040 
Fax:     (340) 774-2672 
                                      Fax: (340) 773-1006 
 
 
TESTIMONY OF 
DIRECTOR OF THE VIRGIN ISLANDS 
BUREAU OF INTERNAL REVENUE 
BEFORE THE COMMITTEE ON  
ECONOMIC DEVELOPMENT AND AGRICULTURE 
 
GREETINGS HONORABLE SENATOR HUBERT L. FREDERICK, CHAIRPERSON 
OF THE COMMITTEE ON ECONOMIC DEVELOPMENT AND AGRICULTURE, 
MEMBERS OF THE COMMITTEE, ALL OTHER SENATORS PRESENT, AND THE 
LISTENING AND VIEWING AUDIENCE. I AM JOEL A. LEE, DIRECTOR OF THE VIRGIN 
ISLANDS BUREAU OF INTERNAL REVENUE.  THANK YOU FOR ALLOWING THE 
BUREAU TO PRESENT TESTIMONY ON BILL NO. 36-0063. 
THIS BILL SEEKS TO STRENGTHEN THE LANGUAGE OF VARIOUS SECTIONS 
OF TITLE 33 OF THE VIRGIN ISLANDS CODE.  SECTION 1, SUB SECTIONS A-C OF THE 
BILL WILL IMPROVE THE EXISTING LANGUAGE OF THE VIRGIN ISLANDS CODE BY 
CLARIFYING THE FACT THAT EXCISE AND GROSS RECEIPTS TAXES APPLY TO ALL 
TYPES OF ENTITIES THAT PERFORM BUSINESS ACTIVITIES IN THE VIRGIN 
ISLANDS, EVEN IF THE ENTITIES ARE CREATED, FORMED, MANAGED OR EVEN 
HEADQUARTERED OUTSIDE OF THE USVI.  THE CLARIFICATION WOULD PROVE 
USEFUL ESPECIALLY FOR THOSE ENTITIES THAT ARE FORMED OUTSIDE OF THE 
USVI THAT COME TO THE USVI FOR ECONOMIC GAIN. 
BUREAU OF INTERNAL REVENUE TESTIMONY 
BILL 36-0063 
GRT CLARIFICATION 
Page 2 of 2 
 
SECTION D WILL CLARIFY THE APPLICATION OF THE GROSS RECEIPTS TAX 
ON ALL INCOME RECEIVED, ESPECIALLY FOR THOSE ENGAGING IN  GOVERNMENT 
PROJECTS THAT INCLUDES REBUILDING THE VARIOUS STRUCTURES USING 
DISASTER RECOVERY FUNDING.  
JUST FOR THE RECORD, GROSS RECEIPTS TAX IS A TAX THAT IS APPLIED TO 
THE GROSS SALES OF ANY ENTITY DOING BUSINESS, WITHOUT ANY DEDUCTIONS 
FOR EXPENSES.  IT IS IMPOSED ON SOLE PROPRIETORS, CORPORATIONS, 
PARTNERSHIPS AND ANY OTHER TYPE OF ASSOCIATIONS CONDUCTING 
BUSINESS.   IT IS KNOWN AS A TRICKLE-DOWN TAX. IT APPLIES ON EVERY LEVEL 
OF PAYMENT. IN A CONSTRUCTION EXAMPLE, THE GENERAL CONTRACTOR PAYS 
5% ON THE FULL AMOUNT OF THE CONTRACT; THEN HE PAYS THE PLUMBER, WHO 
THEN PAYS 5% ON HIS FULL PAYMENT RECEIVED. THE CONTRACTOR AND 
PLUMBER SHOP IN A HARDWARE STORE – THAT HARDWARE STORE PAYS 5% ON 
THE MONEY RECEIVED FROM THE CONTRACTOR AND THE PLUMBER.  NO ONE IS 
SPARED THE GROSS RECEIPTS TAX. SO, WHEN COMPANIES THAT ARE FORMED 
OUTSIDE OF THE USVI COME TO THE USVI TO WORK, THEY TOO MUST PAY THEIR 
FAIR SHARE OF THE GROSS RECEIPTS TAX. 
THE BUREAU WELCOMES ANY OPPORTUNITY TO CLARIFY LANGUAGE IN 
THE LAW THAT WILL SERVE TO MAKE THE ADMINISTRATION OF THE TAX 
SIMPLER FOR THE TAXPAYER.   I AM AVAILABLE TO ANSWER ANY QUESTIONS 
YOU MAY HAVE AT THIS TIME.