Income Tax
The State of South Carolina's corporate
income tax rate
is 5%, the lowest in the Southeastern United States. Corporations
engaged in multi-state activities are taxed only on the portion of
income derived from doing business in South Carolina. The basis for
South Carolina's gross corporate income and taxable corporate income is
based primarily upon a corporation's federal gross income and taxable
income.
Job Tax Credit
The Jobs Tax Credit is a valuable financial incentive that rewards new
and expanding technology intensive companies for creating jobs in South
Carolina. To qualify, a company must create and maintain a minimum of
10 net new jobs in a taxable year.
The credit for each employee ranges from $2,500 in Charleston County to
$3,500 in Berkeley County for a period of 5 years and may be carried
forward for 15 years from the year earned. The credit per employee may
be increased by $1,000 if the project is located in a designated
'multi-county industrial park.'
Corporate Headquarters Credit
To offset the cost associated with establishing, relocating or
expanding a national or regional corporate headquarters facility with
at least 40 employees, South Carolina provides a generous credit
against corporate income tax or corporate license fees. The credit is
equal to 20% of qualifying real property costs and direct construction
costs or lease costs for the first 5 years of operation for the
headquarters.
Research and Development Credit
This credit is designed to reward companies for increasing research and
development activities in a taxable year, South Carolina offers a
credit equal to 5% of the taxpayers qualified expenditures for R&D
made in the state. Unused credits may be carried forward for 10 years
from the date of the qualified expenditure.
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Property Tax Incentives
In South Carolina, only local governments levy
property taxes.
There is no state tax on real and personal property. To offset property
tax liability, qualified companies may take advantage of one of two
incentives programs. Depending on the total investment, a company may
qualify for either a five-year abatement of a portion of property tax
or, by agreement of the county, a fee-in-lie of taxes.
Five-Year County Property Tax Abatement
Companies may apply for a five-year exemption from county property
taxes (the exemption does not apply to school taxes) for the following:
- new research and development facilities and additions costing $50,000 or more
- new corporate office facility and additions costing $50,000 or more and where at least 75 full-time jobs are created
- new manufacturing facilities and all additions costing $50,000 or more
Fee-in-lieu of Taxes (FILOT)
Qualified companies investing five million dollars or more in a
facility are eligible to take advantage of a very valuable local
incentive that allows a county to negotiate a fee-in-lieu of property
taxes. The advantages to a company include:
- significantly lowering property tax payments by negotiating a lower assessment ratio (from 10.5% to as low as 6%)
- negotiating the applicable millage rate to a 20 year locked rate or a five-year adjustable rate
- stabilizing payments to local government for the term of agreement (up to 20 years)
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Enterprise Zone
South Carolina's Enterprise Program is substantially different from the
state's other tax incentives because it provides companies with funds
to offset the cost of locating or expanding a business facility in the
state.
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Job Development Credit
With the approval of the South Carolina Coordinating Council, the Job
Development Credit provides qualifying technology intensive facilities
companies with funds to offset the cost of locating or expanding a
business facility in the State. Companies are allowed to keep a portion
of their employees state withholding taxes funds the company would
normally transfer to the South Carolina Department of Revenue.
Representing actual cash contributions to a project, this incentive
allows companies to lower the effective cost of investment and
positively contribute to a company's bottom line and profitability.
Qualified companies creating at least 10 full-time jobs and providing
health care benefits, are eligible for cash reimbursements on capital
expenditures including land, building, site development or
infrastructure, as well as training costs and employee relocation
expenses for technology intensive facilities. The actual value of the
credit of the credit depends on the following:
- Number of new full-time jobs
- Rate of pay (net of benefits), and
- The county's status where the jobs are created
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Job Retraining Credit
To remain competitive or introduce new technologies eligible businesses
may negotiate with the Coordinating Council for a refund of up to $500
per employee per year for retraining. Companies may use employee
withholdings to support half the cost of training the employee.
Companies are not allowed to claim the Job Development Credits and the
Retraining Credits for the same employee. Participation is subject to
the following:
- An application must be submitted to the coordinating council
- The retraining must be approved by and coordinated by the
technical college under the jurisdiction of the State Board for
Technical and Comprehensive Education serving the approved business.
- Refunds per eligible employee may not exceed $500 per year nor $2,000 over five years.
- The company must match on a dollar for dollar basis the employees withholding share used for training.
- The total amount is paid to the technical college providing the training
- Rate of pay (net of benefits), and
- The county's status where the jobs are created
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Sales Tax
South Carolina imposes a 5%
sales tax
on the gross proceeds of sales of every person engaged in the business
of selling tangible personal property at retail. Companies located in
the Corridor pay an additional 1% sales tax imposed by local government
and used to provide additional revenue and a property tax rollback.
Sales Tax Exemptions:
- Equipment used in research and development
- Packaging materials
- Machinery, equipment and replacement parts used in the manufacturing process
- Raw materials to become part of the finished product
- Air, water and noise pollution control equipment
- Electricity and fuels used in the manufacturing process
- Long distance telecommunications
- $300 maximum sales tax applies to sale or lease of motor vehicles, trucks, aircraft, boats and other related items.
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Revolving Loan Fund
The Berkeley-Charleston-Dorchester Council of Governments'
Revolving Loan Fund (RLF)
is a locally controlled source of capital that assists start-up and
growing businesses whose projects help improve the Charleston region's
economy. The primary purpose of the RLF is to aid creation and
retention of permanent full-time jobs in the region. The RLF is used as
"gap financing," meaning that RLF loans are used to leverage private
sector loans and investments to help fulfill an applicants capital
needs.
Eligible uses of loans include the purchase of machinery, equipment,
real estate and inventory, as well as the improvement of real estate
and building facilities. Loans can be used to provide permanent working
capital on a limited basis. In general, loan terms will average three
to five years on working capital, five to seven years on machinery and
equipment, and up to 15 years on real estate. The Council of
Governments (COG) will fix the interest rate between Prime (+) 2 points
and Prime (-) 4 points for the life of the loan.
To calculate the approximate amount the RLF can inject into a project,
multiply the total project amount by 33%. The overall job
creation-to-loan ratio must be one job created or retained per $10,000
in funds borrowed from the COG.
RLF loans may be subordinated to a participating lender. Financing is
available in amounts up to $150,000. Further, Corridor companies may be
able to combine funds available from the Berkeley-Charleston-Dorchester
Council of Government's Revolving Loan Fund with monies available from
the Charleston Local Development Corporation.
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