Why Is Only 10% Withheld When I Hit a Jackpot in the U.S. Virigin Islands?

29 August 2009

By John Robison

Hi John,

Is there any particular reason why foreign tax in the U.S. Virgin Islands is 10% instead of the 30% that's recognized by all casinos in the U.S.?

According to an article I found at findlaw.com, the tax code in the U.S. Virgin Islands mirrors the federal tax code in the United States -- except where they differ. One difference is in how income received in the U.S. Virgin Islands by people who are not U.S. citizens or residents is treated.

Here's the paragraph from findlaw.com:

Individuals who are non-resident aliens of the United States and who have U.S. Virgin Islands source income are subject to the same rules with respect to such income as would be applicable if such income were from U.S. sources except that the tax on their U.S. Virgin Islands source income is payable to the U.S. Virgin Islands. There is one exception, however: passive income is taxed at 10% of the gross amount of the income and not at either the 30% rate set forth in the U.S. Internal Revenue Code or the lower rates that are applicable under U.S. tax treaties.

Best of luck in and out of the casinos,
John

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