SALT Report 2670 – The California General Assembly has approved recent Senate amendments to a bill that, if enacted, will create a sales and use tax exemption for purchases of manufacturing and bio-tech equipment, and research and development equipment. The sales and use tax exemption will have an annual cap of $200 million in aggregate purchases.
The Bill also provides a sales and use tax credit that will be available to qualified businesses located in an enterprise zone or designated census tract for 6.5 years. If the business is located outside those boundaries, the credit will be available for 4.5 years. The sales and use tax credit does not have an annual cap.
The Bill requires that if purchased property is later removed from the state, or used for unqualified activities within one year of purchase, the business will be subject to a claw-back equal to the value of the exemption.
The Bill also has provisions that amend the current economic development area credits and incentives program, including enterprise zone credits and incentives. The Bill will replace those credits with a new hiring credit and a GO-Biz credit against personal income, corporate franchise, and income taxes beginning in 2014.
AB 93 has been sent to the Governor for his signature.
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