Territorial Tax Parity and Fairness Act

This bill amends the Internal Revenue Code of 1986 to modify the definition of a "United States person" for specific tax purposes. It provides that an individual who is a bona fide resident of the Virgin Islands and a shareholder of a corporation organized under Virgin Islands law will not be treated as a U.S. person for determining certain gross income inclusions related to that corporation. This exclusion applies specifically if a dividend received by the individual from the corporation would be considered income derived from sources within the Virgin Islands under section 934(b)(1) of the Code. The amendment aims to adjust the tax treatment of income from Virgin Islands corporations for these residents, ensuring greater parity. These changes will take effect for taxable years of foreign corporations beginning after December 31, 2024, and for individuals' taxable years that coincide with or encompass these corporate taxable years.