                                 CODE OF VIRGINIA

MAJOR BUSINESS FACILITY JOB TAX CREDIT (§ 58.1-439)

A. For taxable years beginning on and after January 1, 1995, but before July 1,
2025, a taxpayer shall be allowed a credit against the taxes imposed by Articles
2 (&#xA7; 58.1-320 et seq.), 6 (&#xA7; 58.1-360 et seq.), and 10 (&#xA7;
58.1-400 et seq.) of Chapter 3; Chapter 12 (&#xA7; 58.1-1200 et seq.); Article 1
(&#xA7; 58.1-2500 et seq.) of Chapter 25; or Article 2 (&#xA7; 58.1-2620 et
seq.) of Chapter 26 as set forth in this section.

B. For purposes of this section, the amount of any credit attributable to a
partnership, electing small business corporation (S corporation), or limited
liability company shall be allocated to the individual partners, shareholders,
or members, respectively, in proportion to their ownership or interest in such
business entities.

C. A &#8220;major business facility&#8221; is a company that satisfies the
following criteria:

   1. Subject to the provisions of subsections K or L, the establishment or
   expansion of the company shall result in the creation of at least 50 jobs for
   qualified full-time employees; the first such 50 jobs shall be referred to as
   the &#8220;threshold amount&#8221;; and

   2. The company is engaged in any business in the Commonwealth, except a retail
   trade business if such trade is the principal activity of an individual
   facility in the Commonwealth. Examples of types of major business facilities
   that are eligible for the credit provided under this section include, but are
   not limited to, a headquarters, or portion of such a facility, where company
   employees are physically employed, and where the majority of the
   company&#8217;s financial, personnel, legal or planning functions are handled
   either on a regional or national basis. A company primarily engaged in the
   Commonwealth in the business of manufacturing or mining; agriculture, forestry
   or fishing; transportation or communications; or a public utility subject to
   the corporation income tax shall be deemed to have established or expanded a
   major business facility in the Commonwealth if it meets the requirements of
   subdivision 1 during a single taxable year and such facilities are not retail
   establishments. A major business facility shall also include facilities that
   perform central management or administrative activities, whether operated as a
   separate trade or business, or as a separate support operation of another
   business. Central management or administrative activities include, but are not
   limited to, general management; accounting; computing; tabulating; purchasing;
   transportation or shipping; engineering and systems planning; advertising;
   technical sales and support operations; central administrative offices and
   warehouses; research, development and testing laboratories;
   computer-programming, data-processing and other computer-related services
   facilities; and legal, financial, insurance, and real estate services. The
   terms used in this subdivision to refer to various types of businesses shall
   have the same meanings as those terms are commonly defined in the Standard
   Industrial Classification Manual.

D. For purposes of this section, the &#8220;credit year&#8221; is the first
taxable year following the taxable year in which the major business facility
commenced or expanded operations.

E. The Department of Taxation shall make all determinations as to the
classification of a major business facility in accordance with the provisions of
this section.

F. A &#8220;qualified full-time employee&#8221; means an employee filling a new,
permanent full-time position in a major business facility in the Commonwealth. A
&#8220;new, permanent full-time position&#8221; is a job of an indefinite
duration, created by the company as a result of the establishment or expansion
of a major business facility in the Commonwealth, requiring a minimum of 35
hours of an employee&#8217;s time a week for the entire normal year of the
company&#8217;s operations, which &#8220;normal year&#8221; shall consist of at
least 48 weeks, or a position of indefinite duration which requires a minimum of
35 hours of an employee&#8217;s time a week for the portion of the taxable year
in which the employee was initially hired for, or transferred to, the major
business facility in the Commonwealth. Seasonal or temporary positions, or a job
created when a job function is shifted from an existing location in the
Commonwealth to the new major business facility and positions in building and
grounds maintenance, security, and other such positions which are ancillary to
the principal activities performed by the employees at a major business facility
shall not qualify as new, permanent full-time positions.

G. For any major business facility, the amount of credit earned pursuant to this
section shall be equal to $1,000 per qualified full-time employee, over the
threshold amount, employed during the credit year. The credit shall be allowed
ratably, with one-third of the credit amount allowed annually for three years
beginning with the credit year. However, for taxable years beginning on or after
January 1, 2009, one-half of the credit amount shall be allowed each year for
two years. The portion of the $1,000 credit earned with respect to any qualified
full-time employee who is employed in the Commonwealth for less than 12 full
months during the credit year will be determined by multiplying the credit
amount by a fraction, the numerator of which is the number of full months that
the qualified full-time employee worked for the major business facility in the
Commonwealth during the credit year, and the denominator of which is 12. A
separate credit year and a three-year allowance period shall exist for each
distinct major business facility of a single taxpayer, except for credits
allowed for taxable years beginning on or after January 1, 2009, when a two-year
allowance period shall exist for each distinct major business facility of a
single taxpayer.

H. The amount of credit allowed pursuant to this section shall not exceed the
tax imposed for such taxable year. Any credit not usable for the taxable year
the credit was allowed may be, to the extent usable, carried over for the next
10 succeeding taxable years. No credit shall be carried back to a preceding
taxable year. In the event that a taxpayer who is subject to the tax limitation
imposed pursuant to this subsection is allowed another credit pursuant to any
other section of the Code of Virginia, or has a credit carryover from a
preceding taxable year, such taxpayer shall be considered to have first utilized
any credit allowed which does not have a carryover provision, and then any
credit which is carried forward from a preceding taxable year, prior to the
utilization of any credit allowed pursuant to this section.

I. No credit shall be earned pursuant to this section for any employee (i) for
whom a credit under this section was previously earned by a related party as
defined by Internal Revenue Code &#xA7; 267(b) or a trade or business under
common control as defined by Internal Revenue Code &#xA7; 52(b); (ii) who was
previously employed in the same job function in Virginia by a related party as
defined by Internal Revenue Code &#xA7; 267(b) or a trade or business under
common control as defined by Internal Revenue Code &#xA7; 52(b); (iii) whose job
function was previously performed at a different location in Virginia by an
employee of the taxpayer, a related party as defined by Internal Revenue Code
&#xA7; 267(b), or a trade or business under common control as defined by
Internal Revenue Code &#xA7; 52(b); or (iv) whose job function previously
qualified for a credit under this section at a different major business facility
on behalf of the taxpayer, a related party as defined by Internal Revenue Code
&#xA7; 267(b), or a trade or business under common control as defined by
Internal Revenue Code &#xA7; 52(b).

J. Subject to the provisions of subsections K or L, recapture of this credit,
under the following circumstances, shall be accomplished by increasing the tax
in any of the five years succeeding the taxable year in which a credit has been
earned pursuant to this section if the number of qualified full-time employees
decreases below the average number of qualified full-time employees employed
during the credit year. Such tax increase amount shall be determined by (i)
recomputing the credit which would have been earned for the original credit year
using the decreased number of qualified full-time employees and (ii) subtracting
such recomputed credit from the amount of credit previously earned. In the event
that the average number of qualifying full-time employees employed at a major
business facility falls below the threshold amount in any of the five taxable
years succeeding the credit year, all credits earned with respect to such major
business facility shall be recaptured. No credit amount will be recaptured more
than once pursuant to this subsection. Any recapture pursuant to this section
shall reduce credits earned but not yet allowed, and credits allowed but carried
forward, before the taxpayer&#8217;s tax liability may be increased.

K. In the event that a major business facility is located in an economically
distressed area or in an enterprise zone as defined in Chapter 49 (&#xA7;
59.1-538 et seq.) of Title 59.1 during a credit year, the threshold amount
required to qualify for a credit pursuant to this section and to avoid full
recapture shall be reduced from 50 to 25 for purposes of subdivision C 1 and
subsection J. An area shall qualify as economically distressed if it is a city
or county with an unemployment rate for the preceding year of at least 0.5
percent higher than the average statewide unemployment rate for such year. The
Virginia Economic Development Partnership shall identify and publish a list of
all economically distressed areas at least annually.

L. For taxable years beginning on or after January 1, 2004, but before January
1, 2006, in the event that a major business facility is located in a severely
economically distressed area, the threshold amount required to qualify for a
credit pursuant to this section and to avoid full recapture shall be reduced
from 100 to 25 for purposes of subdivision C 1 and subsection J. However, the
total amount of credit allowable under this subsection shall not exceed $100,000
in aggregate. An area shall qualify as severely economically distressed if it is
a city or county with an unemployment rate for the preceding year of at least
twice the average statewide unemployment rate for such year. The Virginia
Economic Development Partnership shall identify and publish a list of all
severely economically distressed areas at least annually.

M. The Tax Commissioner shall promulgate regulations, in accordance with the
Administrative Process Act (&#xA7; 2.2-4000 et seq.), relating to (i) the
computation, carryover, and recapture of the credit provided under this section;
(ii) defining criteria for (a) a major business facility, (b) qualifying
full-time employees at such facility, and (c) economically distressed areas; and
(iii) the computation, carryover, recapture, and redemption of the credit by
affiliated companies pursuant to subsection S.

N. The provisions of this section shall apply only in instances where an
announcement of intent to establish or expand a major business facility is made
on or after January 1, 1994. An announcement of intent to establish or expand a
major business facility includes, but is not limited to, a press conference or
extensive press coverage, providing information with respect to the impact of
the project on the economy of the area where the major business facility is to
be established or expanded and the Commonwealth as a whole.

O. The credit allowed pursuant to this section shall be granted to the person
who pays taxes for the qualified full-time employees pursuant to Chapter 5
(&#xA7; 60.2-500 et seq.) of Title 60.2.

P. No person shall claim a credit allowed pursuant to this section and the
credit allowed pursuant to &#xA7; 58.1-439.2. Any qualified business firm
receiving an enterprise zone job creation grant under &#xA7; 59.1-547 shall not
be eligible to receive a major business facility job tax credit pursuant to this
section for any job used to qualify for the enterprise zone job creation grant.

Q. No person operating a business in the Commonwealth pursuant to Chapter 29
(&#xA7; 59.1-364 et seq.) of Title 59.1 shall claim a credit pursuant to this
section.

R. Notwithstanding subsection O, a taxpayer may, for the purpose of determining
the number of qualified full-time employees at a major business facility,
include the employees of a contractor or a subcontractor if such employees are
permanently assigned to the taxpayer&#8217;s major business facility. If the
taxpayer includes the employees of a contractor or subcontractor in its total of
qualified full-time employees, it shall enter into a contractual agreement with
the contractor or subcontractor prohibiting the contractor or subcontractor from
also claiming these employees in order to receive a credit given under this
section. The taxpayer shall provide evidence satisfactory to the Department of
Taxation that it has entered into such a contract.

S. For purposes of satisfying the criteria of subdivision C 1, two or more
affiliated companies may elect to aggregate the number of jobs created for
qualified full-time employees as the result of the establishment or expansion by
the individual companies in order to qualify for the credit allowed pursuant to
this section. For purposes of this subsection, &#8220;affiliated
companies&#8221; means two or more companies related to each other such that (i)
one company owns at least 80 percent of the voting power of the other or others
or (ii) at least 80 percent of the voting power of two or more companies is
owned by the same interests.

T. The General Assembly of Virginia finds that modern business infrastructure
allows businesses to locate their administrative or manufacturing facilities
with minimal regard to the location of markets or the transportation of raw
materials and finished goods, and that the economic vitality of the Commonwealth
would be enhanced if such facilities were established in Virginia. Accordingly,
the provisions of this section targeting the credit to major business facilities
and limiting the credit to those companies which establish a major business
facility in Virginia are integral to the purpose of the credit earned pursuant
to this section and shall not be deemed severable.

U. For taxable years beginning on and after January 1, 2019, and notwithstanding
the provisions of § 58.1-3 or any other provision of law, the Department of
Taxation, in consultation with the Virginia Economic Development Partnership,
shall publish the following information by November 1 of each year for the
12-month period ending on the preceding December 31:

   1. The location of sites used for major business facilities for which a credit
   was claimed;

   2. The North American Industry Classification System codes used for the major
   business facilities for which a credit was claimed;

   3. The number of qualified full time employees for whom a credit was claimed;
   and

   4. The total cost to the Commonwealth&#8217;s general fund of the credits
   claimed.
   				Such information shall be published by the Department, regardless of how
   few taxpayers claimed the tax credit, in a manner that prevents the
   identification of particular taxpayers, reports, returns, or items.

HISTORY: 1994, cc. 750, 768; 1995, c. 365; 1996, c. 874; 1997, cc. 786, 852;
1998, c. 367; 2004, cc. 170, 619; 2005, cc. 863, 884; 2009, c. 753; 2010, cc.
363, 469; 2012, cc. 93, 445, 475; 2015, c. 451; 2019, c. 699; 2022, cc. 11, 203.