South Carolina places a high value on business:
- No state property tax
- No local income tax
- No inventory tax
- No sales tax on manufacturing machinery, industrial power or materials for finished products
- No wholesale tax
- No unitary tax on worldwide profits
- Favorable corporate income tax structures
One of the lowest corporate income tax rates in the Southeast US
A business-friendly method to determine income subject to the state’s corporate income tax-rate
Numerous credits and methods to reduce and eliminate corporate income tax liability
Berkeley County, the SC Department of Commerce, Berkeley Electric, Edisto Electric, South Carolina Power Team, Santee Cooper and our economic development partners have a wide array of incentives available and we can tailor an incentive package specific to your company’s needs. The below incentives are highlighted as examples of just a few of the incentives that are available for companies relocating or expanding at Camp Hall. We look forward to connecting with you to discuss your specific project.
Corporate Income Tax Incentives
- South Carolina provides a myriad of credits that can reduce a company’s corporate income tax liability for up to 10, or in some cases, 15 years.
- At 5%, South Carolina’s Corporate Income Tax Rate is among the lowest in the Southeast. The state uses a single-factor sales formula for apportioning income.
- Many companies qualify for a Jobs Tax Credit, which eliminates up to 50% of a company’s corporate income tax liability for a specified number of years.
- The Corporate License Tax Rate is $1 for each $1,000 of capital stock and paid-in or capital surplus, plus a $15 annual fee.
- For additional information regarding the South Carolina taxes, contact the South Carolina Department of Revenue.
Corporate Income Tax Credits
In addition to a low corporate income tax rate and a favorable formula for determining the income subject to that rate, South Carolina provides a myriad of credits that in some cases can completely eliminate a company’s corporate income tax liability for up to 10, or in some cases, 15 years.
Jobs Tax Credit – The Jobs Tax Credit is a valuable financial incentive that rewards new and expanding companies for creating jobs in South Carolina. In order to qualify, companies must create and maintain a certain number of net new jobs in a taxable year. The number of new jobs is calculated as the increase in the average monthly employment from one year to the next and the incentive can range from $1,500 to $26,000 per employee per year.
Corporate Headquarters Tax Credit – In an effort to offset the costs associated with relocating or expanding a corporate headquarters facility, South Carolina provides a generous 20% tax credit based on the value of the actual portion of the facility dedicated to the headquarters operation or direct lease costs for the first five years of operation.
Enhanced Corporate Headquarters Credit – In addition to the standard Corporate Headquarters Tax Credit discussed above, South Carolina offers an additional credit equal to 20% of the tangible personal property costs of establishing the headquarters.
Investment Tax Credit – South Carolina allows manufacturers locating or expanding in South Carolina a one-time credit against a company’s corporate income tax of up to 2.5% of a company’s investment in new production equipment.
Research and Development Tax Credit – In order to reward companies for increasing research and development in a taxable year, South Carolina offers a credit equal to 5% of the taxpayer’s qualified research expenses as defined in Section 41 of the Internal Revenue Code.
Port Volume Increase Tax Credit – South Carolina provides a possible income tax credit or withholding tax credit to manufacturers or distributors or companies engaged in warehousing, freight forwarding, freight handling, goods processing, cross-docking, transloading or wholesale of goods.
Green Initiative Tax Credits
Recycling Facility Tax Credit – In order to reward qualified recycling facilities, South Carolina offers a credit equal to 30% of the cost of recycling property placed into service each year.
Solar Energy Tax Credit – South Carolina allows a company a credit against income taxes equal to 25% of the costs incurred by the company in the purchase and installation of a solar energy system, including a small hydropower system, for heating water, space heating, air cooling, energy-efficient daylighting, heat reclamation, energy-efficient demand response or the generation of electricity in or on a facility in South Carolina owned by the company.
Biomass Resources Tax Credit – South Carolina allows a company a credit against income taxes or corporate license fees, or both, for 25% of the costs incurred for the purchase and installation of equipment used to create power, heat, steam, electricity or another form of energy for commercial use from a fuel consisting of 90% or more biomass resource.
Renewable Fuels Tax Credit – Credits may also be available to a company constructing a facility in South Carolina that produces and/or distributes renewable fuels. The amount of credit for constructing a production facility is equal to 25% of the cost of constructing or renovating a building and equipping the facility for the purpose of producing renewable fuel and must be taken in seven equal annual installments beginning with the taxable year the facility is placed in service.
Energy Conservation and Renewable Energy Tax Credit – South Carolina allows a taxpayer a credit equal to 25% of all expenditures incurred during the taxable year for the purchase and installation of the various energy conservation and renewable energy production measures.
Sales & Use Tax Incentives
Sales & Use Tax – The sales and use tax rate in South Carolina is 6%. Some counties assess a local option sales tax and/or a capital project sales tax, which currently range from 1 to 2.5%. Proceeds of such local taxes go toward infrastructure improvements or a rollback of property taxes. A variety of sales tax exemptions for companies is offered. Learn More.
Out-of-State Sales – South Carolina exempts sales tax on the gross proceeds of the sales of tangible personal property where the seller, by contract of sale, is obligated to deliver to the buyer, an agent of the buyer or a donee of the buyer, at a point outside of South Carolina or to deliver it to a carrier or to the mails for transportation to a point outside of South Carolina.
Out-of-State Purchases – South Carolina provides a use tax credit for purchases of tangible personal property paid in another state if the state in which the property is purchased and the sales and use taxes are paid allows substantially similar tax credits on tangible personal property purchased in this state. If the amount of the sales or use tax paid in the other state is less than the amount of use tax imposed in South Carolina, the user is required to pay the difference to this state.
Local Property Taxes & Incentives
In South Carolina, only local governments may levy property taxes.
Valuation and Assessment
The Department of Revenue determines the fair market value of a business’ real property (land and building) and personal property (machinery and equipment) to assure equitable local treatment. The fair market value is then assessed at rates established in the State Constitution.
- For manufacturers, real and personal property are both assessed at 10.5%.
- The assessment ratio for all other businesses is 6% for real property and 10.5% for personal property.
- For homeowners, primary residences are assessed at 4%.
Property Tax Exemption
In support of business, South Carolina exempts three classes of property from local property taxation:
- All inventories (raw materials, work-in-progress and finished goods)
- All intangible property
- All pollution control equipment
Property Tax Incentives
5-Year Property Tax Abatement
By law, manufacturers (investing $50,000 or more) and distribution or corporate headquarters facilities (investing $50,000 or more and creating 75 new jobs in year 1) are entitled to a five-year property tax abatement from county operating taxes.
Fee-In-Lieu of Property Taxes (FILOT)
Under this program, companies making substantial capital investments may negotiate a lower assessment ratio and stabilize millage rates for up to 30 years. The long-term savings of the FILOT is based on the actual investment and is dependent on both the assessment and millage rates negotiated with the county.
State Discretionary Incentives
South Carolina has three discretionary grant funds that are administered by the South Carolina Coordinating Council for Economic Development. The Coordinating Council will evaluate each project on a case-by-case basis and a grant may be awarded by the Coordinating Council, in their sole discretion, depending on the needs of the project.
The Economic Development Set-Aside Program assists companies in locating or expanding in South Carolina through road or site improvements and other costs related to business location or expansion.
The Governor’s Closing Fund was created in 2006 to assist when additional funding is necessary to recruit or retain in the state high impact economic development projects.
The Rural Infrastructure Fund (RIF) assists qualified counties in the state’s rural areas by providing financial assistance for infrastructure and other activities that enhance economic growth and development.
Job Development Credit – South Carolina’s Enterprise Program is substantially different from the state’s other tax incentives because it does not reduce a particular tax liability; instead, it provides companies with funds to offset the cost of locating or expanding a business facility in this state. Representing actual cash contributions to the project, this incentive allows South Carolina to lower the effective cost of investment and positively contribute to a company’s bottom line and profitability.
Port Volume Increase Credit – South Carolina provides a possible credit against income taxes or withholding taxes to entities that use state port facilities and increase base port cargo volume by 5% over base-year totals. To qualify, a company must have 75 net tons of non-containerized cargo or 10 loaded TEUs transported through a South Carolina port for their base year.
Funds for Retraining Available Employee for Existing Industry – Eligible businesses engaged in manufacturing, processing, or technology-intensive industry may be eligible for a refund of up to $1,000 per eligible full-time employees per year for retaining costs. The retaining must be necessary for the business to remain competitive or to introduce new technologies.
Foreign Trade Zones
A foreign-trade zone is a designated location in the United States where companies can use special procedures that help encourage U.S. activity and value added – in competition with foreign alternatives – by allowing delayed or reduced duty payments on foreign merchandise, as well as other savings. A site which has been granted zone status may not be used for zone activity until the site has been separately approved for foreign-trade zone activation by local U.S. Customs and Border Protection (CBP) officials, and the zone activity remains under the supervision of CBP. Foreign-trade zone sites and facilities remain within the jurisdiction of local, state or federal governments or agencies.
Benefits to a foreign-trade zone user include:
- Duty Exemption. No duties on or quota charges on re-exports.
- Duty Deferral. Customs duties and federal excise tax deferred on imports.
- Inverted Tariff. In situations where zone production results in a finished product that has a lower duty rate than the rates on foreign inputs (inverted tariff), the finished products may be entered at the duty rate that applies to its condition as it leaves the zone (requires prior authorization).
- Logistical Benefits. Companies using foreign-trade zone procedures may have access to streamlined customs procedures (e.g. “weekly entry” or “direct delivery”).
- Other Benefits. Foreign goods and domestic goods held for export are exempt from state/local inventory taxes. Foreign-trade zone status may also make a site eligible for state/local benefits which are unrelated to the foreign-trade zone Act.
Camp Hall is in an Opportunity Zone. Opportunity Zones are a federal program created by Congress in the Tax Cuts and Jobs Act of 2017 to encourage economic development and job creation in low-income urban and rural communities. The program provides federal tax reductions for taxpayers who invest unrealized capital gains into specialized “Opportunity Funds” which then make an investment in designated “Opportunity Zones.” The zones themselves are comprised of low-income community census tracts designated by governors in every state.
Benefits of an Opportunity Zone Investment
- Investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026.
- If the QOF investment is held for five years or longer, they may receive a 10% step-up-in-basis for the deferred gains.
- If the investor holds the investment in the Opportunity Fund for at least 10 years, the investor pays no capital gains on the appreciation.
Content Source: sccommerce.com