                                 CODE OF VIRGINIA

ENTERPRISE ZONE BUSINESS TAX CREDIT (§ 59.1-280)

A. As used in this section:
			&#8220;Business tax credit&#8221; means a credit against any tax due under
Articles 2 (&#xA7; 58.1-320 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 of Title
58.1 due from a business firm.
			&#8220;Large qualified business firm&#8221; means a qualified business firm
making qualified zone investments in excess of $15 million when such qualified
zone investments result in the creation of at least 50 permanent full-time
positions. &#8220;Qualified zone investment&#8221; and &#8220;permanent
full-time position&#8221; shall have the meanings provided in subsection A of
&#xA7; 59.1-280.1.
			&#8220;Small qualified business firm&#8221; means any qualified business firm
other than a large qualified business firm.

B. The Department shall certify annually to the Commissioner of the Department
of Taxation, or in the case of business firms subject to tax under Article 2
(&#xA7; 58.1-2620 et seq.) of Chapter 26 of Title 58.1 to the Director of Public
Service Taxation for the State Corporation Commission, the applicability of the
business tax credit provided herein for a qualified business firm. Any
certification by the Department pursuant to this section shall not impair the
authority of the Department of Taxation or State Corporation Commission to deny
in whole or in part any claimed tax credit if the Department of Taxation or
State Corporation Commission determines that the qualified business firm is not
entitled to such tax credit. The Department of Taxation or State Corporation
Commission shall notify the Department in writing upon determining that a
business firm is ineligible for such tax credit.

C. Small qualified business firms shall be allowed a business tax credit in an
amount equal to 80 percent of the tax due to the Commonwealth for the first tax
year and 60 percent of the tax due the Commonwealth for the second tax year
through the tenth tax year.

D. Large qualified business firms shall be allowed a business tax credit in a
percentage amount determined by agreement between the Department and the large
qualified business firm, provided such percentage amounts shall not exceed the
percentages provided for small qualified business firms as set forth in
subsection C.

E. Any business tax credit not usable may not be applied to future tax years.

F. When a partnership or a small business corporation making an election
pursuant to Subchapter S of the Internal Revenue Code is eligible for a tax
credit under this section, each partner or shareholder shall be eligible for the
tax credit provided for in this section on his individual income tax in
proportion to the amount of income received by that partner from the
partnership, or shareholder from his corporation, respectively.

G. Tax credits provided for in this section shall only apply to taxable income
of a qualified business firm attributable to the conduct of business within the
enterprise zone. Any qualified business firm having taxable income from business
activity both within and without the enterprise zone shall allocate and
apportion its Virginia taxable income attributable to the conduct of business as
follows:

   1. The portion of a qualified business firm&#8217;s Virginia taxable income
   allocated and apportioned to business activities within an enterprise zone
   shall be determined by multiplying its Virginia taxable income by a fraction,
   the numerator of which is the sum of the property factor and the payroll
   factor, and the denominator of which is two.
   				a. The property factor is a fraction. The numerator is the average value
   of real and tangible personal property of the business firm which is used in
   the enterprise zone. The denominator is the average value of real and tangible
   personal property of the business firm used everywhere in the Commonwealth.
   				b. The payroll factor is a fraction. The numerator is the total amount
   paid or accrued within the enterprise zone during the taxable period by the
   business firm for compensation. The denominator is the total compensation paid
   or accrued everywhere in the Commonwealth during the taxable period by the
   business firm for compensation.

   2. The property factor and the payroll factor shall be determined in
   accordance with the procedures established in &#xA7;&#xA7; 58.1-409 through
   58.1-413 for determining the Virginia taxable income of a corporation having
   income from business activities which is taxable both within and without the
   Commonwealth, mutatis mutandis.

   3. If a qualified business firm believes that the method of allocation and
   apportionment hereinbefore prescribed as administered has operated or will
   operate to allocate or apportion to an enterprise zone a lesser portion of its
   Virginia taxable income than is reasonably attributable to business conducted
   within the enterprise zone, it shall be entitled to file with the Department
   of Taxation a statement of its objections and of such alternative method of
   allocation or apportionment as it believes to be appropriate under the
   circumstances with such detail and proof and within such time as the
   Department of Taxation may reasonably prescribe. If the Department of Taxation
   concludes that the method of allocation or apportionment employed is in fact
   inequitable or inapplicable, it shall redetermine the taxable income by such
   other method of allocation or apportionment as best seems calculated to assign
   to an enterprise zone the portion of the qualified business firm&#8217;s
   Virginia taxable income reasonably attributable to business conducted within
   the enterprise zone.

H. Tax credits awarded under this section and under &#xA7; 59.1-280.1 shall not
exceed $7.5 million annually until the end of fiscal year 2019.

I. The provisions of this section shall apply only as follows:

   1. To those qualified business firms that have initiated use of enterprise
   zone tax credits pursuant to this section on or before July 1, 2005;

   2. To those small qualified business firms and large qualified business firms
   that have signed agreements with the Commonwealth regarding the use of
   enterprise zone tax credits in accordance with this section on or before July
   1, 2005; provided that in the case of small qualified business firms, the
   signed agreements must be based on proposals developed by the Commonwealth
   prior to November 1, 2004.

HISTORY: 1982, c. 275; 1983, c. 572; 1988, c. 236; 1992, c. 301; 1995, c. 792;
1996, c. 77; 1997, c. 517; 1998, c. 759; 2003, c. 676; 2005, cc. 863, 884; 2009,
cc. 207, 271; 2011, c. 850.