Local Property Tax Abatement

South Carolina provides property tax abatement for new or existing facilities making new capital investments in the state. Qualifications:

• A company must be involved in manufacturing, research and development, corporate headquarters, office or distribution/warehouse facilities.
• Manufacturers invest at least $50,000 in new capital expenditures in one year.
• Distribution, warehouse, headquarters and office operations must also create a minimum of 75 new jobs or 150 equivalent part-time jobs.

Application:

• The abatement is given for five years.
• The company will pay only the school portion of their property taxes.
• Concurrent abatements may occur if repeated yearly investments are made.

Value: The result could be an approximate savings of 25 percent to 35 percent on annual property taxes for real and personal property. The abatement for 2011 is 156.0 mills. Example: $10 Million investment X 10.5% assessment ratio X .343 millage rate = $360,150 annual tax. Abatement Example: $10 Million investment X 10.5% assessment ratio X .156 millage abatement = $163,800 abatement savings of $819,000 over 5 years.

Fee-In-Lieu of Property Taxes

A company may negotiate with Lee County Council for a Fee-in-Lieu of Property Taxes agreement. Qualifications:

• A new or existing company must be a manufacturer, warehouse/distributor or an office/headquarters.
• A company must make a minimum capital investment of $5 million in real and personal property.
• There is no minimum job creation requirement.

Application:

• The fee incentive is designed so that companies will have lower property tax payments over the life of the fee.

Value:

• A company may negotiate a reduction in the assessment rate from the usual 10.5 percent down to a minimum of 6 percent.
• A company may also negotiate a lock on the millage rate for the life of the agreement.

Job Development Credit Incentive

The Job Development Credit (JDC) is substantially different from the states’ other tax incentive 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 costs of investment and positively contribute to a company’s bottom line and profitability. Qualifications:

• A company must be a manufacturer, processor, warehouse, distributor, researcher & developer, corporate headquarters, office facility or involved in tourism.
• Create at least 10 new full-time jobs; or 250 jobs for office projects.
• Provide full-time employees a benefits package which includes health care.
• Submit an application to the South Carolina Coordinating Council providing an approved expenditure plan for the JDF Funds ($4,000 fee). $2,000 of which is refunded if application is not approved.
• There is no minimum capital investment requirement; although a company must sign a “Revitilization Agreement” with the S.C. Coordinating Council stating the project is of greater benefit than cost to the state. A company has five years from the date of the agreement to obtain project investment and employment levels.

Application:

• JDC’s may be used for the following expenditures: the purchase and improvement of real property, infrastructure, pollution control equipment, transportation facilities, employee training, and in some instances, lease payments (at the discretion of the Coordinating Council).
• These funds come from new employees’ state personal withholding tax the company retains and are not financially affected.

Value: The percentage, which may be withheld by the company, is shown below:

Because Lee County is a Tier I county, a company may retain 100 percent of its job development fee. Example:

Job Tax Credit

South Carolina provides a corporate income tax credit for companies that create new jobs through the location of a new facility in the state or the expansion of an existing facility.

Qualifications:

• Companies must be involved in manufacturing, processing, warehousing, distribution, research and development, tourism, or corporate headquarters facilities.
• Create a minimum of 10 new jobs.
• Office facilities are eligible but are required to create 10 new jobs.

Application: The credit can be applied to one-half of the corporate income tax liability with a 15-year carry-forward on any unused portion.

• The credit applies for each new full-time position for five years beginning during years two through six.

Value: The tax credit in Lee County is $8,000 per job, with an additional $1,000 for any property located in a multi-county park.

The following table illustrates the value of Jobs Tax Credits assuming creation of 200 net new jobs. Lee County

Please note, the number of new jobs is calculated as the increase in average monthly employment from one year to the next. Should the number of jobs created also increase or decrease, the total credit will likewise vary.

Corporate Headquarters Credit

A 20 percent state income tax credit is available to corporate headquarters establishing operations in South Carolina.

Qualifications:

• Be the location where corporate staff members or employees are domiciled and where the majority of the company’s financial, legal, personnel and/or other staff functions are handled on a regional basis.
• Be the sole corporate headquarters within the region or nation (this does not include divisional headquarters).
• The company must create a minimum of 40 new full-time jobs in South Carolina, 20 of which must be management and professional positions. Credit is given for 20 percent of the cost of construction or lease expenses.

Child Care Tax Credit

This credit is available to companies establishing childcare centers for their employees. Fifty percent of the expenditures, up to $100,000 can be claimed as a tax credit. Also, a credit of 50 percent of child card payments to employees can be deducted up to $3,000 per employee.

Community Development Tax Credit

South Carolina allows a 33% credit against tax liabilities to individuals, businesses, financial institutions, and insurance companies for contribution investments made to certified community development corporations. The credit cannot be claimed for in-kind services; donations of land; or business/bank loans. The intent of the community development tax credits is to encourage private investment and working capital for these community-based entities, with the ultimate goal of creating partnerships through leveraging public sector incentives, private sector investments, and CDC-CDFI knowledge to build value in low income communities.

State Corporate Income Tax

Corporate income tax rate is 5.0 percent. Corporations engaged in multi-state activities are taxed only on that portion of income derived from doing business in SC. The process for determining the taxable income in SC is based on Allocated Income and Apportioned Income. Apportioned Income is based on a three-factor formula that is weighted as follows: 1) Property Factor (25%); 2) Payroll Factor (25%): and, 3) Sales Factor (50%). The SC Apportionment formula is based upon the Uniform Division of Income for Tax Purposes Act (UDITPA), which has been adopted by the majority of the states. In addition, SC permits an extended recovery time for business losses with up to a 15-year carry forward loss period.

Sales & Use Tax

The South Carolina sales and use tax rate is 5 percent. The sales tax applies to all retail, leases, and rentals of tangible personal property, including the value of property purchased at wholesale and used or consumed by the purchaser, unless specifically exempt. The use tax is based on the sales price of such property. South Carolina counties can apply an additional 1 to 2 percent local option sales & use tax. Lee County (by approval of a majority of county voters) assesses an additional 1 percent local option sales tax. Proceeds go toward infrastructure improvements or rollback of property taxes.

State Intangible Personal Property Tax

In support of business, South Carolina exempts all intangible property from local property taxation.

State and Local Property Taxes

There is no state tax on real and personal property. In South Carolina, local government levies property taxes. All property is appraised at fair market value by the South Carolina Department of Revenue. The fair market value is then assessed at rates established by the 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. The taxes due on each parcel of property is calculated by multiplying the fair market value (including depreciation) by the assessment ration by the local millage (1 mill = $0.001) levied by the taxing authorities within that county (Average millage in Lee County is 325 mills). In addition, there is no property tax on inventory.