The Industrial Development Commission is about to revoke benefits for "a couple" of companies and advise two more that they are in danger of losing their tax incentives, according to IDC director Frandelle Gerard.
She would not name any of the companies, saying they must be notified first.
"We have a process that allows for the immediate revocation of benefits" if a company does not have an active presence in the Virgin Islands, she said. "We have a couple that we’re getting ready to do that to."
In addition, "we do have two (beneficiaries) pending a hearing that’s been approved by the board," she said.
A hearing is required before the commission can revoke benefits or impose penalties on a company if it fails to comply with a major provision of its IDC agreement, Gerard said. The most common problems are a failure to hire the required percentage of V.I. residents (generally 80 percent) or to purchase goods and services locally.
Under IDC regulations, a local supplier can offer prices up to 15 percent higher than an off-island competitor.
Virgin Island businesses that are part of large national or international corporations seem to have the most trouble with the "buy V.I." provisions. Often they conflict with corporate policies of centralized purchasing.
Gerard sympathizes, but said IDC beneficiaries have to find a way around the corporate system in that case. "They fix it or lose their benefits. That’s how I see it."
It will probably be at least February before any hearings are held. The beneficiary is supposed to get 30 days' notice, and Gerard said, "we should have notices out by the end of the month." The commission also must advertise the hearings two weeks before they are held.
A third party, such as a retired judge, will sit as the adjudicator at the hearings, she said.
The IDC announced several weeks ago that it is finally getting serious about monitoring compliance with the provisions of IDC agreements.
Gerard said the process is "ongoing" and includes a meeting sometime this week of the interagency task force set up to coordinate efforts of the various government departments to which a company must report.
"We’ve done a couple of visits" to inspect properties, she said.
Additionally, "we sent out a lot of letters advising people they were not in good standing" because they had failed to give the commission quarterly and/or annual reports.
She indicated the commission is getting good cooperation on that front. In some cases, the company had sent the required report to another government agency and failed to copy the IDC. In some instances, the commission discovered it had misfiled reports. In others, company personnel were not aware of the requirement.
Overall, Gerard said, "I am finding that there are many beneficiaries who not only adhere to the law, but go beyond." Those who comply with the provisions of their IDC agreements are "the majority."


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