How and why does the EDC Program exist?
The EDC Program is authorized by a U.S. Congressional mandate which was legislatively codified in Internal Revenue Code ยง934 and went into effect on January 1, 1960. Its basic purpose is to allow the U.S. Virgin Islands to reduce income taxes for its residents as an incentive to attract new business to the islands in the same manner that mainland States provide tax incentives through their economic development commissions. However, because the US Virgin Islands is a Territory of the United States its economic development commission program can provide federal income tax incentives. Under the authority of the Congressional mandate, the U.S. Virgin Islands chose to use this U.S. legislation to attract new business to the islands by providing a 90% income tax credit to businesses and their owners in exchange for them meeting certain economic obligations to the local U.S. Virgin Islands community. In other words, it is somewhat of an economic quid-pro-quo in the same manner in which mainla
