INDIVIDUAL INCOME TAX Individuals who are bona fide residents of the Virgin Islands file Form 1040 with the Virgin Islands and pay tax on their worldwide income to the Virgin Islands.

Yes, you must pay taxes in the Virgin Islands, but the rules differ significantly between the U.S. Virgin Islands (USVI) and the British Virgin Islands (BVI). In the USVI, residents pay income tax directly to the Virgin Islands Bureau of Internal Revenue under a "Mirror Code" of the U.S. Internal Revenue Code. Essentially, you pay the same rates as you would in the U.S., but the money stays in the territory. U.S. citizens living there generally do not have to file with the IRS as long as they are "bona fide" residents. In the BVI, there is no personal income tax, capital gains tax, or corporate tax; however, employees and employers must pay payroll taxes (typically around 10-14%). Additionally, BVI residents pay land taxes and stamp duties on property. For U.S. expats in the BVI, the U.S. still taxes worldwide income, though the Foreign Earned Income Exclusion can help reduce the liability.