Territorial Tax Parity and Fairness Act

HR 368, the Territorial Tax Parity and Fairness Act, amends the Internal Revenue Code to change how income from Virgin Islands corporations is taxed for certain residents. It specifically excludes bona fide Virgin Islands residents from being treated as non-residents for tax purposes when receiving dividends from Virgin Islands corporations, ensuring such dividends are taxed as if sourced within the territory. This change applies to taxable years beginning after December 31, 2024, for both individuals and related corporate tax years. The bill directly affects Virgin Islands residents who receive dividends from local corporations, adjusting their tax treatment under existing IRS rules.