Chapter
032
2006 -- H 8042
Enacted 05/24/06
A N A C T
RELATING TO
BIOTECHNOLOGY INVESTMENT TAX CREDIT
Introduced
By: Representatives Costantino, Sullivan, Dennigan, Church, and Naughton
Date Introduced: April 27,
2006
It is enacted by the General Assembly as follows:
SECTION
1. Preamble: The purpose of this act is to encourage increased employment
opportunities
and increased jobs in the biotechnology industry in Rhode Island, encourage
biotechnology
investments, attract manufacturing activities of biotechnology corporations,
and to
align
the Rhode Island investment tax credit with the requirements of the
biotechnology industry
by
extending the effective period for investment tax credits earned by
biotechnology
corporations.
SECTION
2. Chapter 44-31 of the General Laws entitled "Investment Tax Credit"
is
hereby
amended by adding thereto the following section:
44-31-1.1.Biotechnology
Investment Tax Credit. -- (a) Any company primarily
engaged
in commercial biological research and development or manufacturing and sale of
biotechnology
products which pays its employees that work a minimum of thirty (30) hours
per
week within the state a median annual wage equal or greater than one hundred
twenty-five
percent (125%) percent of the average annual wage paid by all employers in the
state
to employees that work a minimum of thirty (30) hours per week within the
state, and
provides
benefits typical to the biotechnology industry, shall be allowed a credit of
ten percent
(10%)
of the cost or other basis for federal tax purposes of tangible personal
property and
other
tangible property, including buildings and structural components of buildings
acquired,
constructed,
reconstructed, or leased with situs in Rhode Island and principally used in the
production
of biotechnology products after December 31, 2001.
(1)
“Biotechnology products” means those products that are applicable to the
prevention,
treatment,
or cure of a disease or condition of human beings, and that are produced using
living
organisms,
or materials derived from living organisms, or cellular, sub cellular, or
molecular
component
of living organisms.
(2)
“Principally” means the company’s sales of biotechnology products or costs
related to
the
development of biotechnology products constitute at least fifty percent of its
overall receipts
or its
overall costs respectively.
(3)
“Tangible personal property” and “other tangible property” includes buildings
and
structural
components of buildings acquired, constructed, reconstructed, or leased with
situs in
Rhode
Island and principally used in the production of biotechnology products after
December
31,
2001 that:
(A)
is depreciable pursuant to 26 USC. Section 167,
(B)
has a useful life of four (4) years or more, and
(C)
is acquired by purchase as defined in 26 USC section 179(d), or
(D)
is acquired by lease based on the fair market value of the property at the
inception of
the
lease times the portion of the depreciable life of the property represented by
the term of the
lease,
excluding renewal options, for a term of twenty (20) years; and
(E)
does not include vehicles or furniture
(4)
“Wages” means all remuneration paid for personal services, including
commissions and
bonuses
and the cash value of all remuneration paid in any medium other than cash and
all other
remuneration
which is defined as taxable wages by the Internal Revenue Service, as certified
by
the
department of labor and training.
(b)
If the amount of credit allowable for any taxable year is less than the amount
of credit
available
to the taxpayer, any amount of credit not used in the taxable year will be
available the
following
year or years not to exceed fifteen (15) years and may be deducted from the
taxpayer’s
tax
for the year or years.
(1)
The credit may be extended beyond seven (7) years only in a year in which:
(A)
The company maintains an average quarterly number of employees for each
calendar
year
that is nine and one-half percent (9.5%) greater than average quarter number of
employees in
the
fourth year of the initial credit. Employees are defined as those that work a
minimum of thirty
(30)
hours per week within the state with benefits typical to the biotechnology
industry;
(B)
The biotechnology company’s average quarterly median wage is not less than the
company's
average of its quarterly median wage for the three (3) previous calendar years;
(C)
The biotechnology company pays its employees a median annual wage equal or
greater
than one hundred twenty-five percent (125%) of the average annual wage paid by
all
employers
in the state. Employees are defined as those that work a minimum of thirty (30)
hours per
week
within the state with benefits typical to the biotechnology industry; and
(D)
The department of labor and training certifies to the tax administrator that
the criteria
in
(A) through (C) have been met.
(2)
Unused credits after the seventh year are forfeited permanently if any of these
wage
and
employment criteria are unmet after the seventh year.
(3)
The company may determine the order in which the credits generated in different
tax
years
are utilized, provided that credits available for more than seven (7) years may
not reduce
current
year liability by more than seventy-five percent (75%); and provided further
that in no
event,
can liability be reduced below the minimum tax prescribed in section 44-11-2.
SECTION
3. This act shall take effect upon passage and shall apply to taxable years
beginning on or after December 31, 2000.
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LC03090
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