H.R. 858 — REVIVE VI Act

This section excludes qualified Virgin Islands services income from the definition of tested income used to calculate global intangible low-taxed income (GILTI) for specified United States shareholders of controlled foreign corporations (CFCs). (As background, GILTI generally requires U.S. shareholders of CFCs to include in gross income the excess of aggregate tested income over a routine return—generally 10%—on qualified business asset investment, with tested income excluding certain items such as subpart F income and income effectively connected with a U.S. trade or business.) Qualified Virgin Islands services income means gross income that is (1) compensation for labor or personal services performed in the Virgin Islands by a corporation formed under Virgin Islands law, (2) attributable to services performed from within the Virgin Islands by individuals for the benefit of such corporation, and (3) effectively connected with a trade or business within the Virgin Islands. (Thus, such income is not subject to GILTI for specified U.S. shareholders, who are (1) individuals, trusts, or estates or (2) closely held C corporations—as defined in IRC §469(j)(1)—that acquired their equity interest in the relevant foreign corporation before December 31, 2023.) The amendments apply to taxable years of foreign corporations beginning after the date of enactment and to taxable years of U.S. shareholders with or within which such foreign corporation taxable years end. The Secretary of the Treasury must issue regulations to prevent abuse of this exclusion.