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COMMITTEE ON BUDGET, APPROPRIATIONS AND FINANCE BILL NO. 35-0097 Thirty-Fifth Legislature of the Virgin Islands June 12, 2023 An Act amending title 33 Virgin Islands Code, subtitle 1, part 1, chapter 3 by adding section 43m to establish the “Virgin Islands Beautification Tax Credit” PROPOSED BY: Senator Novelle E. Francis, Jr. Be it enacted by the Legislature of the Virgin Islands: 1 SECTION 1. Title 33, Virgin Islands Code, subtitle 1, part 1, chapter 3 is amended by 2 adding section 43m that reads as follows: 3 “§43m. Virgin Islands Beautification Tax Credit 4 (a) Definitions. As used in this section, unless it is otherwise provided or the context 5 requires a different construction, application, or meaning, the term: 6 (1) “approved beautification project” means any project that has been so 7 designated by the Department as provided in subsection (e). 8 (2) “approved participant” or “participant” means any person who has applied 9 to and has been accepted by the Department to participate in an approved beautification 10 project. 11 2 (3) “Department” means the Department of Public Works. 1 (4) “person” means an individual, partnership, firm, corporation, or other 2 business association. 3 (5) “qualified beautification expenditure” means an expenditure that is directly 4 related to an approved beautification project as provided in subsection (c). 5 (6) “Virgin Islands Beautification Tax Credit” means the tax credit established 6 in subsection (b). 7 (b) An approved participant shall be entitled to a tax credit, known as the Virgin Islands 8 Beautification Tax Credit, against the participant’s gross receipts tax in an amount equal to the 9 lesser of the participant’s gross receipts tax liability for a given gross receipts tax period, or the 10 participant’s qualified beautification expenditures for the given gross receipts tax period. An 11 approved participant whose qualified beautification expenditures exceed the participant’s gross 12 receipt tax liability for the participant’s gross receipts tax period shall be entitled to carry 13 forward any excess Virgin Islands Beautification Tax Credit to the following gross receipts tax 14 period, and during such following gross receipts tax period, the carried forward Virgin Islands 15 Beautification Tax Credit shall be treated as a qualified beautification expenditure. 16 (c) A qualified beautification expenditure includes: 17 (1) Payments to employees or contractors engaged solely or partially in the 18 cleaning or maintenance of the approved beautification project area, as determined on a 19 pro rata basis and limited to the portion of the costs which directly relates to the cleaning 20 or maintenance of the approved beautification project area. 21 (2) The purchase of qualified cleaning equipment, which includes, subject to the 22 limitations in subparagraphs (A), (B), and (C), any equipment purchased solely to remove 23 litter or other debris from the approved beautification project area. 24 3 (A) For expenditures of $1,000.00 or less per equipment item, the 1 equipment must be used for a cumulative period of at least forty hours for the 2 removal of litter or other debris from the approved beautification project area, or 3 (B) For expenditures greater than $1,000.00 per equipment item, the 4 equipment must be used for a cumulative period of at least 400 hundred hours for 5 the removal of litter or other debris from the approved beautification project area. 6 (C) The expense related to qualified cleaning equipment is limited to the 7 cost of the equipment and the costs relating to the delivery of the equipment to the 8 Virgin Islands. 9 (d) No expenditure shall be considered a qualified beautification expenditure unless 10 the expenditure is incurred by an approved participant of an approved beautification project. 11 (e) The Department shall designate at least five projects per year as approved 12 beautification projects in each district. An approved beautification project shall consist of a 13 geographic designation of a public area, specifically described, where persons are permitted 14 to incur qualified beautification expenditures. In designating a public area as an approved 15 beautification project, the Department shall consider: 16 (1) The amount of garbage and other debris that pollutes an area; 17 (2) The level of public use of an area; 18 (3) The visibility of an area to members of the public; 19 (4) The proximity of an area to facilities such as schools, parks, beaches, and 20 hospitals; and 21 (5) The aggregate expense of the project. 22 (f) Any person may apply to be an approved participant by submitting a written 23 application to the Department stating the approved beautification project to which the 24 4 application pertains, the work to be performed by the person, and the total amount of qualified 1 beautification expenditures for the project. Any person may apply to the Department to have 2 a public area in the Virgin Islands designated as an approved beautification project. The 3 application must be in writing and specify why the public area meets the criteria listed in 4 subsection (e), the work to be performed by the person, and the total amount of qualified 5 beautification expenditures for the project, not to exceed $150,000. Within 60 days of the 6 receipt of an application submitted under this subsection, the Department shall approve the 7 application, approve the application with modifications, or deny the application. 8 (g) The Department shall specify the limit of total qualified beautification expenditures 9 allowed for each approved beautification project. Each year, the total of approved expenditures 10 for all beautification projects shall not exceed $1,500,000 for each district. 11 (h) The Department may terminate any approved beautification project upon 30 days’ 12 advance written notice to the participant. No qualified beautification expenditure shall be 13 allowed for any participant after the 30-day notice period has expired. 14 (i) Any approved participant claiming a Virgin Islands Beautification Tax Credit for 15 the payment of employees or contractors must keep a contemporaneous log of: 16 (1) The time the employees or contractors spend performing tasks relating to the 17 cleaning or maintenance of the approved beautification project area; 18 (2) A description of the specific tasks relating to the cleaning or maintenance of 19 the approved beautification project area performed by the employees or contractors; and 20 (3) A record of the proportion of time the employee or contractor spends 21 performing duties relating to the cleaning or maintenance of the approved beautification 22 project area compared to all other duties of such employee or contractor. 23 5 (j) Any person claiming a Virgin Islands Beautification Tax Credit for qualified 1 cleaning equipment must keep a contemporaneous log of the cleaning or maintenance activities 2 associated with the qualified cleaning equipment for the qualified beautification project, 3 including a log of the time the equipment was deployed in the cleaning of the approved 4 beautification project area. 5 (k) Within 30 days after receiving a request from the Director of the Virgin Islands 6 Bureau of Internal Revenue (“Director”), a participant claiming the Virgin Islands 7 Beautification Tax Credit shall provide substantiation of any expense claimed as a qualified 8 beautification expenditure as well as a description of how the qualified beautification 9 expenditure relates to the cleaning or maintenance of the approved beautification project area. 10 If a participant fails to substantiate the information requested in this subsection in the time 11 frame specified, or fails to produce satisfactory substantiation of the information, the Director 12 may disallow the unsubstantiated expenditure for such period as the Director’s request for 13 substantiation pertains to and assess the person’s gross receipts tax liability without the 14 unsubstantiated portion of the Virgin Islands Beatification Tax Credit. 15 (l) The Department of Public Works in conjunction with the Virgin Islands Bureau of 16 Internal Revenue, shall promulgate regulations to administer and carry out the purposes of this 17 section. 18 (m) Notwithstanding 33 V.I.C. §3072 (c), the sum of $3,000,000 is appropriated each 19 fiscal year from the Tourism Advertising Revolving Fund to the Virgin Islands Bureau of 20 Internal Revenue for the purpose of funding the tax credits approved under subsection (b).” 21 BILL SUMMARY 22 This bill amends title 33, Virgin Islands Code, subtitle 1, part 1, chapter 3 by adding 23 section 43m establishing the “Virgin Islands Beautification Tax Credit” (“Tax Credit”) which 24 gives a person a credit against the person’s gross receipts tax in an amount equal to the lesser 25 6 of the person’s gross receipts tax liability for a given gross receipts tax period, or the person’s 1 qualified highway beautification expenditures for the given gross receipts tax period. The bill 2 also establishes the requirements for record-keeping, requires the Department of Public Works 3 in conjunction with the Virgin Islands Bureau of Internal Revenue to promulgate regulations, 4 and makes an annual appropriation of $3,000,000 from the Tourism Advertising Revolving 5 Fund to the Virgin Islands Bureau of Internal Revenue for the purpose of funding the Tax 6 Credit. 7 BR23-0149/June 2, 2023/GC 8