The Port Credit is awarded to a company engaged in manufacturing, warehousing, or distribution which uses the state’s water, air, or rail ports and is based on the users increased cargo volume through such facilities.
- Act 2016-102 (HB 34) establishes the Alabama Renewal Commission in order to award the Port Credit.
- The Port Credit is awarded based on the Commission’s determination as to whether granting a Port Credit will increase the use of the state’s port facilities leading to the creation of new, high paying jobs in the state, bringing in substantial capital to the state, and further promoting the economic development efforts of the state.
Requirements for claiming a Port Credit
- Port facility user must submit a certification to the Department of Commerce containing information adequate to prove the user is entitled to the Port Credit and have met the requirements set forth by the Commission.
- Must contain information as deemed necessary to verify that the port facility user shipped more than 105% of its cargo volume for the 12 month period immediately preceding the port facility users application to the Commission.
- Once the Department of Commerce verifies the required information, they will certify the information and report to the Department of Revenue that the user is entitled to the awarded Port Credit amount.
- Port Credit may be used to offset taxes levied by Chapter 18, but may not lower taxes to below zero.
- May also offset estimated tax payments levied by Chapter 18, but not below zero.
- Port Credit’s in excess of a users tax liability may be carried forward for up to 5 years.
- The Port Credit may be utilized on a pro rata basis for entities taxes under Subchapter S or Subchapter K since the Act is silent on the issue.
Additional Port Credit Allocation Requirements
- Port Credits which have not been awarded to a facility user may be allocated to any company which has entered into an economic development project agreement with the state.
- These Port Credit allocations shall be made by the Governor and approved by the Alabama Renewal Commission.
- Allocations may only be granted for a new warehouse or distribution facility which commits to investing at least $20,000,000 at a single site and which creates 75 new jobs in Alabama.
- Allocations for such projects shall not exceed $3,000,000.
- Port Credits allocated may not be utilized until the Department of Commerce has received satisfactory proof that the capital investment and job creation requirements have been met.
- Any Port Credit granted by allocation shall not be granted for more than 3 years.
- Obligations not met in the project agreement provides for the recapture of all or part of the allotted Port Credit.