Incentives Programs that help your company succeed

Union County is designated as one of South Carolina's "least developed" counties and has at its disposal all of the state and local incentives available to a new or existing company in the state.

Union County officials will work with you to provide you with free workforce training and other incentives that will enable your company to maximize profits and enhance its operations in a worker-friendly environment.

The following is a summary of the incentive packages that may be available to your company.  The Union County Development Board can provide you with a detailed incentive summary for your project once the following is known:

• The projected land and building costs for the project
• The projected new machinery and equipment costs for the project
• The number of new jobs to be created with the average wage rates for those workers

We stand ready to assist you with any questions concerning our tax structure and incentive opportunities. 

• A stable 5 percent corporate income tax rate - South Carolina has the lowest income tax rate in the Southeastern United States.
   

• A balanced budget - South Carolina is one of only eight states with an AAA bond rating.
   

• A broad range of probusiness legislation - South Carolina’s incentives are designed to offer real competitive advantages.
   

• Business tax stability - South Carolina has the eighth lowest per capita tax burden in the United States.
   

• Consistently affordable Workers’ Compensation and Unemployment Insurance costs - in 1998 South Carolina had the lowest average Workers’ Compensation rates in the United States.

Exemptions & Incentives Offset Taxes

Exemptions From Sales Tax

Corporate Income Taxes:  The Lowest in the Southeast

Calculating Corporate Income:  The First Step in Lowering Tax Liability

The first step to maintaining low corporate income tax liabilities is the state’s formula for calculating corporate income. your company’s annual corporate income is based on the following:

• income allocated to South Carolina operations (interest, dividends, royalties, rents, property sale gains and losses, and personal services income); and
   

• income apportioned to the operations (based on weighted payroll, property, and sales factors). South Carolina double weighting of sales reduces the amount of corporate income most companies apportion to the state.

A 5 percent corporate income tax rate is applied to the sum of these incomes. The resulting figure is the company’s state corporate income taxes.

All companies must pay an annual corporate franchise tax. The rate is one mill ($0.001) per dollar of a proportion of total paid-in-capital and paid-in-surplus (earned surplus is not included), plus an annual $15 license fee. For multi-state corporations, the license fee is determined by apportionment in the same manner employed in computing apportioned corporate income.

South Carolina maintains a number of aggressive and valuable credits that are specifically designed to lower your company’s corporate income tax liabilities.

Jobs Tax Credits:  A Reward for Job Creation

By creating new jobs in Union County, your company is eligible for a tax credit against annual corporate income tax liability. The value of these credits is $4,500 per job annually for a five-year period.  If Union County agrees to designate your site as a "multi-county industrial park," this designation allows your company to take advantage of an additional $1,000 per net new job -- meaning, Jobs Tax Credits of $5,500 are available.

In an effort to offset the cost associated with relocating or expanding a corporate headquarters facility, South Carolina provides a generous 20 percent credit based on the value 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 to 50 percent of the company’s income tax liability 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 each of the following criteria:

• a minimum of 40 new full-time jobs must be created which are engaged in corporate headquarters or R&D activities -- 20 of these jobs must be classified as staff employees;
   
• cost of new construction or addition must exceed $50,000 (i.e., costs incurred in the design, preparation, and development of either establishing or expanding a corporate headquarters; or direct construction or direct lease costs during the first five years of operation);
   
• be the location where corporate staff members or employees are domiciled and where the majority of the company’s financial, legal, personnel, planning, and/or other staff functions are handled on a regional or national basis; and
   
• be the sole corporate headquarters within the region or nation (a region is defined as a geographical area comprised of either five states [including South Carolina]; or two or more states [including South Carolina] if the entire business operations of the company are performed in fewer than five states).

In addition to the standard headquarters credit, there is an enhanced corporate headquarters credit to offset personal property costs. This credit is for 20 percent of the tangible personal property costs of establishing the headquarters (15-year carry-forward). Like the standard credit, these credits are not limited to 50 percent of the company’s income tax liability and can potentially eliminate corporate income taxes.

To qualify for this credit, your company must meet the criteria for the standard HQ credit, and the tangible personal property must meet the following requirements:

• be capitalized as personal property for income tax purposes under the federal Internal Revenue Code;
   
• be purchased for the headquarters facility or research and development facility which is a part of the same project;
   
• be used for headquarters or research and development related functions and services; and
   
• be used to create a minimum of 75 permanent new full-time jobs performing headquarters or research and development related functions and services. The new jobs must have an average cash compensation level of more than one and one-half times the per capita income in South Carolina at the time the newly created jobs are filled. At the same time, the average cash compensation level for all the company’s employees within the state must be greater than twice the per capita income in South Carolina.

Child Care Tax Credits

South Carolina was one of the first states to recognize the changing demographics in the labor market. This state has taken a national leadership role in offering businesses a credit for childcare expenses that can be applied to state corporate income tax.

Companies may claim credits for capital costs and operating costs associated with establishing and/or operating a child care program or facility. The maximum credit claimed might equal the following:

• 50 percent of the incurred capital expenditures (not to exceed $100,000); and/or
   
• 50 percent of the child-care payments incurred by the employer (not to exceed $3,000 per participating employee).

These credits are limited to 50 percent of the company’s income tax liability and have a carry-forward period of 10 years. When used in combination with other credits, such as the Jobs Tax Credit, the child-care credit can lower your company’s effective corporate income tax rate to 1.25 percent.

Local Property Taxes

your company’s property taxes are only levied by the local (county and/or city) government. Unlike some states, South Carolina exempts all inventories (raw materials, work-in-progress, and finished goods), all intangible property, and pollution control equipment from property taxation. Three factors are used to determine property taxes:

However, if your company is investing more than $5 million, you are eligible for a second incentive that offers greater savings above that of the Five-Year Abatement. This incentive, called a Fee-in-Lieu of Property Tax (FILOT), replaces the Abatement and is offered at the discretion of Union County.

Fee-in-Lieu of Property Tax

South Carolina law allows Union County to enter into a negotiated agreement for a Fee-in-Lieu of local property taxes with your company if total capital investment is $5 million or greater. The long-term savings of the Fee-in-Lieu is based on the actual investment (both real and personal property), and is dependent on both the assessment and millage rates negotiated with Union County.

This incentive may result in substantial benefits for your company:

• Savings: Payments to local government are significantly reduced through the negotiation of a lower assessment rate (from 10.5 percent to as low as 6 percent) and the negotiation of a locked-in millage rate for 20 years or a five-year adjustable rate.
   

• Planning: Payments to local government are stabilized for the term of the agreement. This ultimately allows your company greater flexibility in financial planning for as long as 20 years.
   

• Scheduling: If your company is investing more than $45 million, the payment stream can be negotiated to meet financing needs -- ultimately, your company can gain control of long-term cash flows. The most common schedule is an equalized or flat annual payment.
   

• Additional Savings for Substantial Capital Investments: If your company is investing more than $400 million and creating 200 net new jobs, or  $200 million with $200 million already invested and creating 200 net new jobs, a "Super Fee" is negotiable. This fee can further lower the assessment rate to as low as 4 percent. In addition, the "Super Fee" lengthens the agreement to as long as 30 years.

Sales Taxes and Tax Exemptions

South Carolina’s corporate citizens pay one of the lowest sales and use tax rates at 5 percent.

In addition to maintaining a low sales tax rate, South Carolina offers a number of exemptions that reduce both upfront costs and recurring costs on equipment. The following sales tax exemptions are comprehensive and generous:

• manufacturing production machinery and applicable repair parts;
• manufacturing materials that become an integral part of the finished product;
• industrial electricity and other fuels used in manufacturing tangible personal property;
• research and development equipment;
• manufacturers’ air, water and noise pollution control equipment;
• material handling equipment for manufacturing projects investing $35 million or more;
• packaging materials; and
• long distance telecommunication services, including 800 services.

In addition to the sales tax exemptions, South Carolina further reduces your company’s tax burden by providing valuable sales tax caps on specific items: a maximum sales tax of $300 on the sale or lease of automobiles, trucks, boats, and aircraft.

Enterprise Program Job Development Credit

As a manufacturer, your company is qualified to apply for the Job Development Credit. The credit is a unique incentive that allows South Carolina to assist your company in significantly reducing, or in some cases completely offsetting, certain approved capital expenditures over a 10-year period. Unlike tax credits or exemptions, this incentive is credited quarterly as a direct cash contribution. your company can only expect to collect Job Development Credits from employees earning an hourly wage equal to or more than that of Union County ($9.92 per hour).

If approved, your company may be reimbursed for portions of the following types of expenditures (please note if approved, only those eligible expenditures that occur within 60 days of the application submittal will be considered for reimbursement by the Council):

To be qualified to apply, your company must submit an Application for Qualification for Enterprise Program Incentives to the South Carolina Coordinating Council for Economic Development. your company must create at least 10 net new full-time jobs or equivalents with a benefits package that includes health care. Only qualifying capital investments made within five years after the application has been approved (and any similar investments made sixty days prior to approval) can be considered for reimbursement. Please note there is a $4,000 processing fee included in the application process and a $500 annual renewal fee.

Please note that your company has 18 months from the date of approval by the Coordinating Council to finalize the Revitalization Agreement and the amount of Job Development Credits cannot exceed the amount of eligible expenditures approved.

The Revitalization Agreement establishes your company’s investment and employment commitments used to claim the credit, sets the project’s investment and employment completion date (must be within five years of the date of the agreement), and identifies eligible expenditures. Once your company has met the investment and job creation criteria outlined in the Revitalization Agreement, your company would be able to begin collecting Job Development Credits.

The total amount of Job Development Credits your company will receive depends on three criteria:

• the hourly wage rate paid to individual employees (shown in Table 1),
   

• the development designation of the county (shown in Table 2), and
   

• total value of eligible expenditures approved by the South Carolina Coordinating Council for Economic Development and stipulated in the Revitalization Agreement.