ANNOUNCEMENT 02 Jul 2015In July 2015, a US state government announced a targeted tax change.
NUMBER OF INTERVENTIONS
On July 2, 2015 the Alabama Jobs Act (Act 2015-27) became law. The act provides incentives to certain businesses for projects that create any number of new employees, for a qualifying project whose predominant activity involves chemical manufacturing, data centers, engineering, design or research, or at least 50 new employees, for all other projects. The bill authorizes an incentivized company to claim either or both (1) a jobs credit against utility taxes equal to 3% of wages paid to eligible employees in the previous year for 10 years, or (2) an investment credit against income taxes, financial institution excise taxes, insurance premium taxes, utility taxes, or some combination of these taxes in an annual amount of 1.5 percent of the capital investment for 10 years, based on the terms and conditions of the project agreement entered into between an approved company and the Governor. To qualify for an incentive under the act, the Secretary of Commerce and the Governor must determine that a project is in fact a qualifying project and that the amount of tax incentives sought are exceeded by the anticipated revenues to the state, including income, property, business privilege, utility, and sales and use taxes as they arise from: (1) construction activities related to the qualifying project; (2) purchase of building materials and initial equipping of the qualifying project; (3) subsequent equipping of the qualifying project; and (4) the operation of the qualifying project. In addition, the act authorizes the Governor to decrease the amounts and duration of the incentives to ensure the anticipated revenues to the state will exceed the amount of incentives sought. Under the act, the incentive period does not begin for either credit until after the project is placed into service.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.