Combined with state government and external resources, Virginia’s Gateway Region communities offer competitive incentive packages. The region has numerous competitive business advantages and a welcoming business environment, not to mention the Commonwealth of Virginia’s unparalleled reputation for business success. For the extra financial boost in building a business case, VGR can develop an incentive proposal for you to take advantage of some of the following incentives for new and expanding businesses. Contact us today to take a closer look.
Tax Exemptions and Reductions
- Virginia does not tax intangible property, manufacturers’ inventory, furniture, fixtures, corporate aircraft or certified pollution control facilities and equipment.
- Localities can fully or partially exempt: certified recycling equipment, rehabilitated commercial/industrial real estate for up to 15 years, manufacturers’ generating and cogenerating equipment, certified solar energy devices, and environmental restoration sites (eligible real estate in the Virginia Voluntary Remediation Program).
- Localities may elect to tax the following at reduced rates: research and development, tangible personal property, equipment used for biotechnology research, development and production, semiconductor manufacturing machinery and tools, computer hardware and peripherals, aircraft, clean-fuel vehicles, tangible personal property used in the provision of certain Internet services and energy-efficient buildings.
Sales and Use Tax Exemptions
- Manufacturers’ purchases used directly in production, including machinery, tools, spare parts, industrial fuels and raw materials
- Items purchased for resale by distributors
- Certified pollution control equipment and facilities
- Custom computer software
- Utilities delivered through lines, pipes or mains
- Purchases used directly and exclusively in research and development
- Most film, video and audio production-related purchases
- Charges for Internet access, related communications services and sales of software via the Internet
- Purchases used directly and exclusively in activities performed in cooperation with the Virginia Commercial Space Flight Authority
- Semiconductor clean rooms or equipment and other tangible personal property used primarily in the integrated process of designing, developing, manufacturing or testing a semiconductor product
- Computer equipment purchased or leased for the processing, storage, retrieval or communication of data in certain circumstances
- Machinery, tools, equipment, and materials used by a licensed brewer in the production of beer and materials such as labels and boxes for use in packaging and shipment for sale
State Corporate Income Tax Credits
The Virginia corporate income tax rate is 6%, with no unitary tax levied on Virginia companies’ worldwide profits. For companies with significant payroll and property in Virginia, there is great benefit from a double weighted sales factor in the state’s income apportionment formula. Tax credits are available for the following:
- Major business facility jobs – $1,000 per job over a 25- to 50-job threshold
- Recycling equipment –10% of original capitalized cost
- Green job creation – $500 for each annual salary of $50,000 or more, up to 350 jobs
- Day care facility investment – Maximum of $25,000 for expenditures incurred to establish a day-care facility for the children of employees.
- Worker retraining – 30% of all expenditures for eligible worker retraining
- Research and development tax credit – 15% or 10% of the first $167,000 or 20% of the first$175,000 of research done in conjunction with a Virginia college or university
- Port volume increase – companies using Virginia port facilities that increase their cargo volume by at least 5% in a year are eligible for a $50/TEU credit
- International trade facility – $3,500 per new employee or 2% of the amount of capital investment made to facilitate the increased eligible trade or $6,000 per job or 4% of capital investment in a "tobacco-dependent locality"
- Barge and rail usage – $25/TEU moved by barge or rail instead of by truck, for international trade facility companies
Reduced Training/Recruitment Costs
The Virginia Jobs Investment Program offers custom recruiting and training services and direct funding to offset recruitment and training costs. This program is limited to for-profit companies with new full-time jobs paying entry-level wages of at least 1.35 times the federal minimum wage, but this requirement may be waived in areas with very high unemployment. A company qualifies for the programs below based on the outlined criteria.
- New Jobs Program: For companies creating at least 25 net new jobs within 12 months from the date of the first hire and making a new capital investment of at least $1,000,000 in the location/expansion.
- Workforce Retraining Jobs Program: For a for-profit manufacturing operation or distribution center retraining at least 10 full-time employees (or at least 5 if the company has fewer than 250 total employees), and making a new capital investment of at least $500,000 associated with the retraining project.
- Small Business New Jobs Program: For companies with 250 or fewer employees company-wide, creating at least five net new jobs within 12 months from the date of the first hire, and making a new capital investment of at least $100,000 associated with the start up or expansion.
The Virginia Enterprise Zone Program targets special areas in communities throughout the state for business development and expansion. Base-level state incentives are available for companies expanding or locating in these zones (view zone maps here). Additional incentives are available on a community-specific basis.
- Job Creation Grants: Eligibility: Company must create at least four jobs that include health benefits and pay at least 175 percent of the Federal minimum wage. Personal service, retail, food and beverage positions are excluded. High unemployment areas have reduced wage requirements (150 percent of minimum wage) to qualify. Value: Up to $500 per qualifying job over the four-job threshold, per year, up to 5 years. For companies paying twice the minimum wage, up to $800 per job per year is available.
- Real Property Investment Grants: Eligibility: Company or individual must invest at least $100,000 in a rehabilitation/expansion project or $500,000 in new construction. Value: 20 percent of the excess above the minimum investment requirement. For companies investing up to $5 million, the maximum grant is $100,000. For companies investing more than $5 million, up to $200,000 is available.
- Click here to download VGR Community-Specific Enterprise Zone Incentives
Compensation value for the below programs varies by project according to investment and job creation. Performance agreements tie a company to its commitments, and requirements may be slightly altered depending on other project factors.
- Commonwealth Opportunity Fund: Deal-closing cash grant requires 100% match from the locality and threshold amounts (varying by locality) of qualifying investment and job creation.
- Tobacco Region Opportunity Fund: performance-based grants for projects that create at least $1 million investment and 10 jobs in Virginia’s “Tobacco Region”, including Dinwiddie and Sussex Counties in the Gateway Region, and do so within 360 months.
- Virginia Investment Partnership Grant: A performance incentive for existing Virginia companies making at least $25 million capital investment while maintaining stable employment.
- Major Eligible Employer Grant: Must invest at least $100 million and at least 1,000 new jobs.
- Virginia Economic Development Incentive Grant: Targeting headquarters investment with new jobs paying at least 50% over the local average wage and at least $6,500 per job.
- Clean Energy Manufacturing Incentive Grant: Eligible companies engage in manufacturing of equipment/products related to energy production, conservation, storage or efficiency, requires capital investment of at least $50 million and 200 full-time jobs paying at least the average wage. For wind energy manufacturers, the requirements are lower – a minimum of $10 million investment and 30 full-time jobs paying the average wage.
- Governor’s Agriculture and Forestry Industries Development Fund (AFID): Targeted at new or expanded facilities producing value-added, Virginia-grown agricultural or forestal products.Grants up to $250,000 or 25% of qualified capital expenditures (whichever is less), vary based on project factors.Requires matching commitment from community applying for the grant on behalf of business beneficiary.
- Port of Virginia Economic & Infrastructure Development Program: For companies engaged in Port activities and located in close proximity to the Port, including all Gateway Region localities. Amount varies per job depending on the number of jobs created, with maximum total grant $500,000.
- Transportation Partnership Opportunity Fund: Assists with transportation features connected to the project. Must meet Governor’s Opportunity Fund minimum criteria.
- Economic Development Access Program: Funding to provide adequate road access to a project location. Up to $500,000 in unmatched funds, with up to $150,000 additional funds if matched by other sources ($300,000 total additional).
- Rail Industrial Access Program:Funding for rail improvements related to a project, up to $300,000 in unmatched funds, with up to $150,000 additional funds if matched by the community ($300,000 total additional).
Incentives for Port-Related Investment
- Port of Virginia Development Zone: incentivizes locations and expansions involved in exporting or importing through the Port and creating at least 25 new jobs. The special incentive zone covers the Gateway Region.
- International Trade Facility Tax Credit: Company must increase by at least 10% the amount of cargo transported through a Virginia Port Authority facility and hire new employees or make a new capital investment to facilitate trade.
- Port Volume Increase Tax Credit: Company must be engaged in manufacturing goods or the distribution of manufactured goods, using port facilities in Virginia, and increase its port cargo volume at these facilities by a minimum of 5% in a single calendar year over its base year port cargo volume (requirement may be waived for major facility). The amount of the credit is generally equal to $50 for each TEU above the base year port cargo volume.
- Barge and Rail Usage Tax Credit: Available to international trade facilities, as defined above, that transport cargo through Virginia ports by barge or rail rather than by trucks or other motor vehicles. $25 per TEU or 16 tons of non-containerized cargo moved by barge or rail.
Foreign Trade Zones
A Foreign Trade Zone (FTZ) is land located at or near a U.S. Customs port-of-entry, where foreign and domestic merchandise is considered to be in international commerce (not in U.S. commerce territory). Foreign merchandise may enter and be exported from this area without formal customs entry or the payment of customs duties or government excise taxes. Such fees are only due at the time they leave the FTZ and enter U.S. customs territory. When foreign components are brought into the FTZ and combined into a new product, the user may elect to pay the lower of either the duty applicable to the product or to the component parts, and no duty is paid on the value added to the product by domestic parts or labor within the FTZ. In short, the FTZ offers an extremely flexible method of handling domestic and imported merchandise, allowing users to save time, transportation and handling charges.
Richmond International Airport is FTZ #207, and operates subzones in the region at Southpoint Business Park in Prince George County and just outside Chesterfield County at the Port of Richmond.
Port of Virginia is FTZ #20, and both Surry and Sussex Counties are eligible for the establishment of subzones within this territory.