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.