A Made-in-America Offshore Tax Haven

The Internal Revenue Service treats the U.S. Virgin Islands as a foreign country, a designation that when combined with the incentives fuels a legal accounting alchemy in which high-tax U.S. profits are funneled to the low-tax islands. While plenty of non-U.S. havens have come under intense media attention in recent years, there is little focus on the U.S. Virgin Islands, the only nearly tax-free haven in the world to fly the American flag. (The Netherlands, Bermuda, Cayman Islands and Ireland head the list for havens with the most foreign profits booked there. Delaware, a massive onshore refuge for corporate America, offers state tax savings. Puerto Rico, a U.S. territory, offers incentives but not on the scale of those in the Virgin Islands.)“For the right company, the program offers an unmatched proposition: a dramatic savings on both corporate and personal taxes and a chance to work in one of the most beautiful places in the world,”


Ocwen, which opened subsidiaries on the island of St. Croix in late 2012, will receive the tax breaks for 30 years, until 2042, potentially saving billions of dollars.
“What is understandable is the clear evidence that Ocwen embarked on an aggressive strategy of sourcing as much income out of the United States and into the Virgin Islands to reduce its worldwide tax rate,”
What’s a company like this doing in the U.S. Virgin Islands? With the blessing of the U.S. Treasury and Congress, the islands offer a 90 percent reduction in U.S. corporate and personal income taxes. Much of corporate America already pays federal taxes well below the statutory 35 percent rate. But in the U.S. Virgin Islands, the average rate is just 3.37 percent..........

http://www.newsweek.com/2014/09/19/made-america-offshore-tax-haven-269135.html