Welcome to South Carolina Office of Agribusiness Development

Incentives

Business Incentives

A wide range of attractive incentives, together with competitive tax rates, provide an exceptional economic climate for business in South Carolina. Food processing facilities qualify for these incentives.

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 structure

CORPORATE INCOME TAX INCENTIVES (STATUTORY)

THE JOB TAX CREDIT: The Job Tax Credit (JTC) is a statutory incentive offered to companies, both existing and new, that create new jobs in the state. The credit is available to companies that establish or expand corporate headquarters, manufacturing, distribution, processing, qualified service-related, research and development facilities. This credit is extremely beneficial for companies, because it is a credit against corporate income taxes, which can eliminate 50% of a company’s liability.

ECONOMIC IMPACT ZONE INVESTMENT CREDIT: South Carolina allows manufacturers locating in Economic Impact Zone (EIZ) counties a one-time credit against a company’s corporate income tax of up to 5% of a company’s investment in new production equipment. The actual value of the credit depends on the applicable recovery period for property under the Internal Revenue Code.

CORPORATE HEADQUARTERS CREDIT: In an effort to offset the cost associated with relocating or expanding a corporate headquarters facility, South Carolina provides a generous 20% credit based on the cost of the actual portion of the facility dedicated to the headquarters operation or direct lease costs for the first five years of operation. The credit can be applied against either corporate income tax or the license fee. These credits are not limited in their ability to eliminate corporate income taxes and can potentially eliminate corporate income taxes for as long as 10 years from the year earned. Eligibility for this credit is determined by meeting a number of specific criteria.

RESEARCH AND DEVELOPMENT TAX CREDIT: To reward companies for increasing research and development activities in a taxable year, South Carolina offers a credit equal to 5% of the taxpayer’s qualified research expenses in the state. The term “qualified research expenses” is defined in Section 41 of the Internal Revenue Code. The credit taken in any one taxable year may not exceed 50% of the company’s remaining tax liability after all other credits have been applied. Any unused portion of the credit can be carried forward for 10 years from the date of the qualified expenditure.

SOUTH CAROLINA DISCRETIONARY INCENTIVES

JOB DEVELOPMENT CREDIT: The Job Development Credit is a discretionary, performance-based incentive that rebates a portion of new employees’ withholding taxes that can be used to address the specific needs of individual companies, approved on a case-by-case basis.

ECONOMIC DEVELOPMENT SET-ASIDE PROGRAM: The Economic Development Set-Aside Program assists companies in locating or expanding in South Carolina through road, water and sewer infrastructure, site improvements and other costs related to business location or expansion.

ENTERPRISE ZONE RETRAINING CREDIT PROGRAM: This program allows existing industries to claim a Retraining Credit for existing production employees. The credit allows up to 50% of approved training costs for eligible production workers (not to exceed $500 per person per year.)

RURAL INFRASTRUCTURE FUND: The Rural Infrastructure Fund assists qualified counties in South Carolina’s rural areas by providing financial assistance for infrastructure and other activities that enhance economic growth and development, including job creation and product development.

PORT VOLUME INCREASE CREDIT: This income tax credit is offered to qualified entities that use state port facilities and increase base port cargo volume by 5% over base-year totals. (The base year qualifications are 75 net tons of non-containerized cargo or 10 loaded TEU’s transported through a South Carolina port).

TOURISM INFRASTRUCTURE DEVELOPMENT GRANTS: These grants support new or expanding tourism, recreation facilities or designated development areas primarily through infrastructure projects.

OTHER INCENTIVES: readySC™, Apprenticeship Carolina™, Foreign Trade Zone and BuySC

Note: These programs are administered by the SC Coordinating Council for Economic Development. [CCED].

BUSINESS TAX INFORMATION

CORPORATE INCOME TAX: 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 Job 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.

SALES & USE TAX: South Carolina’s sales and use tax rate is 6%.

Exemptions include:

Electricity and fuels used in the manufacturing process
Machinery, equipment and replacement parts used for manufacturing
Equipment used in research and development
Raw materials to become part of the finished product
Air, water and noise pollution control equipment
$300 maximum sales tax applies to sale or lease of motor vehicles, trucks, aircraft, boats and other related items
Parts and supplies used to repair or condition aircraft owned or leased by the federal government or commercial air carriers
Material handling equipment for manufacturing projects investing $35 million or more in the state
Construction materials used in the construction of a single manufacturing and distribution facility with a capital investment of at least $100 million will be entirely exempt from sales tax

PROPERTY TAX: In South Carolina, only local governments may levy property taxes. A company’s property tax liability is a function of: Property Value x Assessment Ratio x Millage.

To determine Fair Market Value, real property is appraised, while tangible personal property is recorded at cost and then depreciated based on a statutory depreciation rate (for manufacturers) and income tax depreciation (for other businesses). The Fair Market Value is then assessed at rates established in the South Carolina Constitution. The local millage rate is applied to the assessed value to determine the property taxes. Millage rates in South Carolina are site specific and set annually by local government. A mill is equal to $0.001.

Property Tax Exemptions may include inventories (raw materials, work-in-progress, finished goods), intangibles (stocks, dividends, interest) and pollution control equipment.

LOCAL INCENTIVES

5 YEAR PROPERTY TAX ABATEMENT: Companies may apply for a five-year exemption from county property taxes (does not apply to school taxes) for the following: a $50,000 investment in manufacturing facilities, a $50,000 investment in research and development facilities or a $50,000 investment (and 75 new jobs) in corporate headquarters or distribution facilities.

FEE-IN-LIEU OF PROPERTY TAX (FILOT): Allows qualifying companies to negotiate a fee instead of paying property taxes. Advantages include: significantly lowering property tax payments and negotiating the applicable millage rate to a 20 year locked rate or a five-year adjustable rate and stabilizing payments to local government for the term of the agreement (up to 20 years).

Companies investing as little as $2.5 million dollars may negotiate this exemption with the county in which they locate. This 20-year incentive creates significant savings for companies by lowering the assessment ratio from 10.5% for manufacturers to as low as 6%. Furthermore, the millage may be held lower than if the property were not under a FILOT.

NEW MARKET TAX CREDIT PROGRAM

THE NEW MARKET TAX CREDIT PROGRAM permits individual and corporate investors in low-income communities to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities (CDEs). The credit totals 30% of the original investment amount and is claimed over a period of seven years (5% for each of the first three years, and 6% for each of the remaining four years.) The investment in the CDE cannot be redeemed before the end of the seven-year period.