Aiming to increase the number of investments and reducing turnover by taking full advantage of the growing network of ports in their territories, the states of South Carolina and Georgia have decided to set up ad hoc programs to reward companies that decide to expand business through their ports. Further, these programs aim to attract new investors willing to take advantage of the tax incentives offered by the two Southern states.
Who can benefit from the tax incentives of the new program?
Eligibility requirements vary between the two states:
South Carolina, through its International Trade Incentive Program (ITIP) makes $15 million available in tax credits per calendar year. This credit is available to all taxpayers who are involved in the production, warehousing, shipping of goods, cargo handling, cargo processing, transshipment, wholesale of goods, or distribution, exported or imported through port facilities in the state and who increase the volume of port cargo by at least 5% in a single calendar year. The base year port cargo must be:
· at least 75 net tons of non-containerized cargo
· at least 385 cubic metres, or 10 loaded twenty-foot containers (TEUs).
The governing body that decides on a company's eligibility is the Coordinating Council for Economic Development, otherwise known as the 'Council'. A company interested in obtaining the tax incentive must submit its request to the Council by December 31 of the year following the year in which the increase in port volume occurs.
If the requirements are met and the request is accepted, eligible companies may apply for an income tax credit or a credit against employee withholding taxes.
Georgia, on the other hand, offers the Port Tax Credit, a bonus that can be used for either the Job Tax Credit (JTC) or the Investment Tax Credit.
In this case, the requirements for claiming the bonus are a bit stricter than those listed above for South Carolina. In order to take advantage of the tax benefits, businesses must first meet the requirements of one of the programs just mentioned, along with a 10% increase in their imports or exports through Georgia ports over the previous fiscal year.
The initial amount, called the base amount, cannot be less than the required port traffic minimums, in which case the port load must be
· at least 75 net tons
· at least 5 containers or 10 TEUs (20-foot equivalent units)
Depending on the program under which it is used, the port tax credit bonus is calculated as follows:
· Job Tax Credit: An addition of $1,250 (per job) to the job tax credit, which can be taken for five years to reduce or eliminate Georgia's corporate income tax
· Investment Tax Credit: An adjustment in the calculation of the investment tax credit so that the amount of the credit is based on the equivalent of a Tier 1 location. (5% of qualified capital expenditures or 8% for recycling, pollution control, and defence conversion).
Port Tax Credits may be used to offset up to 50% of the company’s corporate income tax liability. Unused credits may be carried forward for 10 years.
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