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Charlotte Amalie
Sunday, July 14, 2024
HomeNewsArchivesHIGH-TECH ENTREPRENEURS APPLY WITH IDC

HIGH-TECH ENTREPRENEURS APPLY WITH IDC

Two software development companies could become the Virgin Islands’ newest businesses if the Industrial Development Commission gives its go-ahead for tax breaks.
Soft DD Inc. and U.S. Viking LLC are the first computer software developers to apply for IDC benefits. At an IDC application hearing Friday on St. Croix, the owners of the two companies outlined their plans for relocating to the territory, with both saying IDC tax exemptions are the key.
Yoram Kochavy, owner of Soft DD, said that initially he would move his consulting company from California to St. Thomas and then expand operations to develop software for free Internet services. Soft DD is asking the IDC to grant it two years to reach the minimum program requirement of 10 local resident employees who would primarily be computer programmers.
David Bornn, Soft DD’s attorney, said that in order for the company to hire 10 Virgin Islanders with backgrounds in programming, a talent pool has to be developed. And that could take time.
Meeting the minimum requirements depends on the pool of employees developed, he said.
"We’re not asking for a waiver of the 10," said Bornn. "We want acknowledgment of the phase-in."
William Neville said he would move his programming business, U.S. Viking, to St. Croix from Florida if it is granted IDC benefits. Neville said his company is the leading newsroom software developer in the world and would employ six people at the end of its first year and 10 after the second.
Neville, who said he developed Microsoft computer applications in the early 1990s, wrote programs that replaced the old teletype machines that giant news organizations like the British Broadcasting Company and the Associated Press once used.
Key to Kochavy and Neville’s success in the territory will be the development of a talent pool within the University of the Virgin Islands’ computer science program.
"I’m looking to develop a relationship with UVI and their computer program specifically," Kochavy said. "We will go into the high schools and promote the technology so there is a better pool of people coming into the university. It’s not only beneficial to me, but the Virgin Islands."
Soft DD would contribute $5,000 a year toward computer education in the territory while U.S. Viking has promised $10,000.
Neville said software development is the most in-demand technology on the mainland but underrepresented in the territory. Attracting such businesses to the Virgin Islands would diversify the local economy, he said.
"If we establish here, it will give students the option to work and stay in the Virgin Islands," Neville said.
But developing a local talent pool that can take advantage of $65,000-a-year salaries, which is what U.S. Viking would offer, will take time. Kochavy said it will take five to eight months to train a person who already has computer skills to do what his company needs. That’s why it is crucial to help develop UVI’s computer program, he said.
"An Internet year is three months," Kochavy said. "What you need to create is a pool of people who are on the cutting edge. The problem isn’t going to be numbers per se, it’s going to be the ability."
Once Soft DD and U.S. Viking reach the minimum requirement of 10 employees, their annual payrolls would reach an estimated $392,680 and $586,519 respectively.
An IDC beneficiary company receives a 90 percent break on local income taxes and 100 percent exemptions on excise, property and gross receipts taxes.
When asked by IDC chairman Rafael Jackson why his company needed tax breaks when it projects million-dollar profits after two years of operation, Kochavy was blunt.
"Obviously, the tax benefits from the IDC is one of the reasons I’m coming here," he said. "My taxes would be much higher somewhere else."
IDC directors Jackson, Malcolm Plaskett, Louis Willis and Mary Ann Pickard are expected to make a decision on the applications in four to six weeks.

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