§ 44-31-1.1 - Biotechnology investment tax credit.
SECTION 44-31-1.1
§ 44-31-1.1 Biotechnology investment taxcredit. – (a) Any company primarily engaged in commercial biological research anddevelopment or manufacturing and sale of biotechnology products or activepharmaceutical ingredients which pays its employees that work a minimum ofthirty (30) hours per week within the state a median annual wage equal orgreater than one hundred and twenty-five percent (125%) of the average annualwage paid by all employers in the state to employees that work a minimum ofthirty (30) hours per week within the state, and provides benefits typical tothe biotechnology industry, shall be allowed a credit of ten percent (10%) ofthe cost or other basis for federal tax purposes of tangible personal propertyand other tangible property, including buildings and structural components ofbuildings acquired, constructed, reconstructed, or leased with situs in RhodeIsland and principally used in the production of biotechnology products afterDecember 31, 2001.
(1) "Biotechnology products" means those products that areapplicable to the prevention, treatment, or cure of a disease or condition ofhuman beings, and that are produced using living organisms, or materialsderived from living organisms, or cellular, sub cellular, or molecularcomponent of living organisms.
(2) "Principally" means the company's sales of biotechnologyproducts or costs related to the development of biotechnology productsconstitute at least fifty percent of its overall receipts or its overall costsrespectively.
(3) "Tangible personal property" and "other tangibleproperty" includes buildings and structural components of buildings acquired,constructed, reconstructed, or leased with situs in Rhode Island andprincipally 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 U.S.C. §179(d), or
(D) is acquired by lease based on the fair market value ofthe property at the inception of the lease times the portion of the depreciablelife of the property represented by the term of the lease, excluding renewaloptions, for a term of twenty (20) years; and
(E) does not include vehicles or furniture.
(4) "Wages" means all remuneration paid for personalservices, including commissions and bonuses and the cash value of allremuneration paid in any medium other than cash and all other remunerationwhich is defined as taxable wages by the Internal Revenue Service, as certifiedby the department of labor and training.
(b) If the amount of credit allowable for any taxable year isless than the amount of credit available to the taxpayer, any amount of creditnot used in the taxable year will be available the following year or years notto exceed fifteen (15) years and may be deducted from the taxpayer's tax forthe year or years.
(1) The credit may be extended beyond seven (7) years only ina year in which:
(A) The company maintains an average quarterly number ofemployees 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 theinitial credit. Employees are defined as those that work a minimum of thirty(30) hours per week within the state with benefits typical to the biotechnologyindustry;
(B) The company's average quarterly median wage is not lessthan the company's average of its quarterly median wage for the three (3)previous calendar years;
(C) The company pays its employees a median annual wage equalor greater than one hundred and twenty-five percent (125%) of the averageannual wage paid by all employers in the state. Employees are defined as thosethat work a minimum of thirty (30) hours per week within the state withbenefits typical to the biotechnology industry; and
(D) The department of labor and training certifies to the taxadministrator that the criteria in (A) – (C) have been met.
(2) Unused credits after the seventh year are forfeitedpermanently if any of these wage and employment criteria are unmet after theseventh year.
(3) The company may determine the order in which the creditsgenerated in different tax years are utilized, provided that credits availablefor more than seven (7) years may not reduce current year liability by morethan seventy-five percent (75%); and provided further that in no event, canliability be reduced below the minimum tax prescribed in § 44-11-2.