Numerous tax incentives and programs aim to lure business to AZ

BYLINE: Josh Coddington

Two clicks of the mouse into the Arizona Department of Commerce Web site will take savvy visitors to the "state incentives and programs" section. This is where people wanting to start a small business, expand a small business, invest in a small business or relocate a small business will find a wealth of information on ways start, get ahead and stay afloat in the world of small business development. The following is a synopsis of some of the numerous state-sponsored incentive programs to encourage business investing in the state. Accelerated Depreciation This program encourages new capital investment by using a scale to reduce personal property tax liability.

Commerce and Economic Development Commission (CEDC) The mission of this commission is to "manage and leverage financial resources that enhance economic development within Arizona. " It is also responsible for developing the state's "10-year economic strategy," administering the lottery-financed CEDC fund, which supports the state's economic development efforts, and acting as a catalyst to develop and implement "economy defining" initiatives, which have a profound impact on all economies within the state. Economic Strength Program This program provides grants for road construction projects. For a project to be selected, it also has to meet three primary goals. The first being creation and retention of "a significant number of jobs in Arizona," they also must make "a significant contribution to the economy of Arizona" and lead to "significant capital investment in Arizona. " Two rounds of annual funding provide about $500,000 for projects. Enterprise Zone Program The goal of this program is to bolster the economies of areas in the state with high poverty and unemployment rates. This is achieved through income or premium tax credits and property tax reduction. There is an application process to establishing an area as an enterprise zone, as well as geographical and population limitations. Applications are accepted Oct.1 - Oct. 31 of each year and are responded to by Dec. 31 of each year. Foreign Trade Zones There are seven foreign trade zones throughout the state. They are treated as legally outside U.S. Customs territory, and therefore, items may be stored, repacked, displayed and assembled duty-free in a designated zone. Imports can avoid full customs formalities here and businesses located inside a zone or sub-zone may receive an 80 percent reduction in state real and personal property taxes. Healthy Forest Enterprise Incentives Program The goal of this program is promotion of healthy forests in Arizona through tax incentives for certified businesses that engage in harvesting, initial processing or transporting of qualifying forest products. Tax incentives include transaction privilege tax reduction, use fuel tax reduction. use tax exemption, property tax reduction and new job income tax credit. Arizona Job Training Program This program fosters the "design and delivery of training plans that meet unique industry standards and challenges," and the creation of more higher-paying jobs in the state. This is achieved by reimbursing up to 75 percent of the costs of "training net new employees in jobs that meet wage criteria," and up to 50 percent of the costs incurred from upgrading existing employees' skills. Government Property Lease Excise Tax Program This program is available to businesses that lease property from the city rather than own it outright. Real property tax is eliminated and businesses instead pay an excise tax based on type of use and square footage. The tax is reduced by 20 percent every ten years until the 51st year, when it becomes zero. In the Downtown Commerce Park, there is no excise tax for the first eight years after the certificate of occupancy. Motion Picture Production Tax Incentives Program This program aims to promote the use of Arizona for production of commercial motion pictures. Tax incentives, such as the transaction privilege tax reduction, use tax exemption and income tax credits are all afforded to production companies that qualify. Applicants eligible for these incentives must be primarily engaged in the business of producing motion pictures, have a physical office and bank account in Arizona, incur an Arizona production cost of at least $250,000 in a 12-month period and employ a certain percentage of Arizona residents, depending on the year. Pollution Control Tax Credit This 10 percent tax credit is given on purchase price of real or personal property used to control or prevent pollution. Research and Development Income Tax Credit This is a state income tax credit awarded for qualified research and development done in Arizona. If allowable expenses are less than $2.5 million, 20 percent is credited. If the amount is over $2.5 million, $500,000 plus 11 percent of the expenses over $2.5 million is credited. This credit also includes research done at a university and funded by a company. Small Business Capital Investment Tax Incentive Program (Angel Investment Program) The aim of this program is to increase early-stage investments in specific small businesses in the state. This is accomplished by providing up to $20 million in tax credits to qualified investors. Currently, an investor can recoup 35 percent of the total invested over three years for an investment in a rural or bioscience company. Solar Energy Tax Incentives Program This program is retroactive to Jan. 1, 2006, and provides an income tax credit to businesses that install qualifying solar energy devices. Credits are limited to 10 percent of the costs of the devices, not to exceed $25,000 for one building in a year or $50,000 for one company in a year. There is also a transaction privilege tax exemption available for solar power equipment purchased at a retailer that is registered with the Arizona Department of Revenue. All information was taken from the Arizona Department of Commerce Web site, http://new.azcommerce.com/BusAsst/Incentives/.