As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
One of our clients recently asked about credits and incentives for their location in Virginia. I was able to speak with some Virginia economic development professionals and learned some of their details (Virginia Economic Development Partnership (YesVirginia) site click here).
Virginia compares favorably with most other states with low corporate tax rates. Virginia ranks 26th in the The Tax Foundation’s 2014 Business Tax Climate Index (click here).
Virginia offers a wide array of incentives, credits, and funding programsto assist businesses in locating or expanding in Virginia jobs and development. Several discretionary incentives are available for large business location and expansion projects. Statutory income tax credits are fairly limited in scale and not very competitive with other states. Special Zones provide reduced or eliminated costs for property taxes, customs duties, sales taxes, and other categories.
One consideration — an application and approval process is required for most of Virginia’s primary incentives. And, Virginia’s credits and incentives can be more complicated than other competitive states.
Compared to Georgia, Virginia has:
- Higher taxes: Similar corporate income taxes. Similar personal income taxes. Higher sales taxes and higher property taxes.
- A narrower range of industries eligible for incentives if adding jobs, a similar range for capital investments, and far smaller incentives for training and workforce development.
- FEW opportunities for incentives unless pre-approved by state and/or local officials.
- Location, location, location — if that’s what is important to the business
To summarize, Virginia is not highly competitive for new and expanding businesses, unless those businesses really need Virginia’s prime location for government markets, corporate headquarters, transportation and culture.
Do any of your clients have Virginia connections? Make sure you review their potential qualifying activities early to maximize their $$ benefits!!