Oregon provides businesses with a number of opportunities for tax credits related to “enterprise zones” in the state. There are over 70 enterprise zones in Oregon And they include both rural and urban areas as well as ports and tribal lands. The different zones often have different requirements and rewards for the taxpayer and are administered by different state and local entities. Requirements vary but two examples are the Long-term Enterprise Zone Facilities Credit and the Reservation Enterprise Zone Tax Credit.
The Long-term Enterprise Zone Facilities Credit is a property tax credit available to C corporations and shareholders in S corporations in certain rural enterprise zones. These zones have local sponsors and have criteria that change. Written approval by the local sponsor is necessary. According to the state website businesses also need:
-Approval, in writing, from the governor
-Local certification for exemption of the facility from property taxes
-Satisfaction of requirements under statute (ORS 285C.406)
These are not the only requirements, of course.
This particular credit is equal to 62.5 percent of the company payroll and employee benefit cost related to the qualifying facility. The credit cannot be taken until the facility is in service but it must be claimed by the third year after the facility is in service. This is a credit aimed at stimulating growth so the emphasis is on new facilities. This tends to be the case with “enterprise zone” credits generally.
This credit can be claimed for up to 15 years. The state website also notes that this credit is not in place of other deductions such as those for amortization, depreciation etcetera but there are, of course, restrictions on what taxes can be offset.
The Reservation Enterprise Zone Tax Credit (2021) is for facilities on tribal land and for offsetting tribal taxes. Again, there are details but the gist is that a tax credit is available for operating a new business facility on tribal land to offset a tribal tax. The business has to be for producing revenue, as opposed, presumably, to a non-profit organization. The business also has to own or occupy a new facility. There it is, the “new” caveat! These credits are often growth focused.
Most types of businesses are eligible except leasing out the facility. Again this credit is only available to businesses located in a designated zone and there are other restrictions. These credits are approved by the Oregon Business Development Department. There are a number of businesses that do not qualify. Details can be found HERE
Perusing the numerous “enterprise zone” credits available in Oregon taxpayers will note there are many similarities between the credits. Unfortunately there are often minute differences related to what taxes can be offset or what sort of businesses are allowed. Each zone has its own nuances, not the least of which is what entity is the “zone sponsor.” These zones can provide substantial tax relief to businesses with new facilities in the state, however, and should not be ignored.