ST. CROIX — Director of the Virgin Islands Bureau of Internal Revenue, Marvin Pickering, in a press release BIR issued on Tuesday, is reminding hoteliers, timeshare developers and innkeepers that the hotel room tax will increase from 10 percent to 12.5 percent effective for hotel stays beginning January 1, 2016.
According to the release, the increased tax rate will apply to every guest that resides in a hotel, villa, time share, inn, or any other sleeping accommodations for a period of less than 90 days, beginning on the aforementioned date.
The hotel room tax is 12.5 percent of the gross room rental, which includes the gross room rate plus any additional charges, such as energy surcharges and maintenance fees. BIR is asking hoteliers to review the calculation of the hotel room tax to ensure that they are calculated in accordance with Title 33 section 54 of the Virgin Islands Code. It adds that the 12.5 percent tax should be separately stated on invoices to alert guests to the amount of tax that is owed by them. According to Mr. Pickering, it is imperative that taxpayers are able to easily identify the tax charges on their bill, to ensure that the tax is being properly calculated.
The increase is a result of a bill sponsored by Senator Neville James at the request of Governor Kenneth Mapp, as a means of generating more revenue to the territory’s general fund.
In past Senate hearings, Dept. of Tourism Commissioner Beverly Nicholson-Doty said she supported the increase — which was last raised from 8 percent to 10 percent in 2010 and went into effect the following year — because it was not burdensome.
The Hotel Tax currently brings revenue of $20 million annually to the general fund. Once the increase goes into effect, it will generate an additional $5.8 million, according to Mr. Pickering.
As for the extra money’s uses, the Dept. of Education will see $500,000 for sporting activities between the islands’ schools, along with events in PR and the BVI. Another $500,000 will be set aside for the Dept. of Sports, Parks and Recreation for sporting and recreational activities. And critically, $1 million will be appropriated to the Dept. of Agriculture’s Revolving Fund, as Governor Mapp has been an advocate for additional funding for said department, and the recent drought has only worked to strengthen his stance.
Nicholson-Doty said at a Committee on Finance hearing earlier this year that even after the 2.5 percent increase, the territory’s rates will still be well below that of other Caribbean destinations.
“Even with the increase, the U.S. Virgin Islands will not be at the highest end of the room tax spectrum and our destination does not have the departure taxes that many independent nations and territories in the region levy,” she said, adding that other taxes in the Caribbean region range from 5 percent to 20, while most were in the range of 10-12 percent.
The commissioner did, however, recommend not increasing the rates above the soon-to-be adopted 12.5 percent.
Hotel room tax returns are due on the 30th day after the end of each month, Tuesday’s release revealed.
Questions concerning the hotel room tax should be directed to the Office of Chief Counsel at (340) 715-1040, ext 2249.
Tags: bureau of internal revenue, hotel room tax increase, us virgin islands
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