The EDC Program
The U.S. Virgin Islands Economic Development Commission program is designed to encourage business relocation to the USVI. Qualifying businesses receive reductions of up to 90% in federal income taxes, 100% reduction in USVI gross receipts and excise taxes, and other benefits.
How Epstein Qualified
Epstein established formally genuine business operations in the USVI through entities like Southern Trust Company. By doing so, he could argue that income generated by these businesses qualified for EDC treatment.
Estimated Tax Savings
The USVI Attorney General’s lawsuit against the Epstein estate alleged that Epstein saved tens of millions of dollars in federal taxes through the EDC program. Some estimates placed the figure at million or more.
The Legal Questions
The lawsuit raised questions about whether Epstein had genuinely operated the qualifying businesses in the USVI as required for EDC eligibility, or whether the USVI presence was primarily nominal.
Settlement
The resolution of the USVI lawsuit in 2022 implicitly acknowledged that the EDC benefits had been improperly obtained or at minimum that the USVI operations had been used for criminal purposes rather than legitimate economic development.