|
Incentives offered by the State of New Mexico
Technology Jobs Tax Credit
The Technology Jobs Tax Credit is known in effect. Commonly referred to
as the Research and Development Credit, the Credit Act is designed to
provide a favorable tax climate for technology-based businesses engaging
in research and development.
Although the R&D Credit was first designed for research and development
companies, the new credit is available to any company that conducts some
aspect of research and development and is not limited to new or recently
relocated businesses.
The basic credit provided by the R&D is equal to 4% of the amount
of qualified expenditures made by a company conducting research within
its New Mexico facilities. Qualifying businesses are also eligible to
claim additional tax credits if the company's annual payroll increases
by at least $75,000 over its base payroll expense. The respective company
must also have a $75,000 increase in its annual payroll expense for every
$1,000,000 in qualified expenditures claimed by the business in a taxable
year.
Companies may claim the amount of the credit against its compensating
tax, gross receipts tax or withholding tax that may be due to the state.
The credit cannot exceed the tax normally due, but can be carried forward
into the next reporting period.
Industrial Development Training Program
Qualifying employers may have up to 65% (depending on the area of the
state where the company is located) of their training costs reimbursed.
Costs that are reimbursable include a trainee's starting hourly wage up
to 1,040 hours, and educational institutions, trainer's wages and instructional
materials.
Industrial Revenue Bonds (see
Appendix 4)
There are two types of Industrial revenue Bonds (IRB's) in New Mexico
- tax exempt IRB's and taxable IRB's. Both can exempt up to 100% of property
taxes. Industrial Revenue Bonds (IRB's) in New Mexico are not used as
a financial tool, but rather as a tool to accomplish tax exemption. The
exemption is achieved because legally the plant is city or county owned.
The company makes lease payments to a bond trustee, who acts as a third
party and uses the money to pay off the bonds. The exemption is in effect
as long as lease payments need to be made. Many companies expanding or
coming to New Mexico have used this exemption program. Intel, for instance,
received a record $8 billion in IRB's. Taxable IRB's are not subject to
IRS regulations or state caps. The primary advantages of IRB's include:
1. The exemption of ad valorem property taxes for the term of the bond.
2. The exemption of gross receipts (5.8%) and compensating tax (5%).
3. Tax-free bonds have lower interest rates than taxable bonds.
Private Activity Bonds
The New Mexico Board of Finance may authorize private activity bonds to
enable a corporation to exempt interest from gross income for federal
tax purposes. The project must be a manufacturing facility, bonds may
not be issued in excess of $10 million and the bond request must be sponsored
by a local government. The corporation may also be eligible for the state
property and compensating tax abatements.
New Mexico Business Participation Loans
The State of New Mexico Investment Council is authorized to invest in
participation of up to 80% in a loan by financial institution to start-up,
expanding or relocating corporations. Eligible uses of funds include the
purchase of land and attaching buildings, and refinancing existing debt
if the loan is for expansion purposes. Loan amounts may range from $500,000
to $2,000,000. Loans mature in not less than five years or more than 15
years.
New Mexico Severance Tax Loan Program
The State of New Mexico is authorized by legislation to purchase up to
$20 million of bonds, notes, debentures or other evidence of indebtedness,
excluding commercial paper, whose proceeds are used for the establishment
or expansion of business outlets or ventures located in New Mexico. Proceeds
may used to purchase land, building and equipment. The rate of interest
to be paid on these evidences of indebtedness shall be equivalent to the
yield available on United States Treasury issues of a comparable maturity
plus 50 to 100 basis points.
The State Investment Council may establish terms for debt retirement,
affecting both principal and interest to meet the needs of the borrower.
These bonds, etc. must be rated not less than Baa or BBB or the equivalent
by a national rating service, or debt secured with an irrevocable letter
of credit issued by an institution or corporation rated A or better. The
loan may not exceed 20 years.
Community Development Block Grants (CDBG)
Funds allocated on a yearly basis from the U.S. Department of Housing
and Urban Development. The grant is made to a local unit of government,
which then makes loans to the private sector. The loan can be used for
acquisition of real property and equipment, working capital and construction,
but may not be used to finance the movement of equipment or plants from
one location to another. The CDBG funds require a 2:1 match between non-CDBG
and non-public cash funds to the CDBG amount. The loans are extremely
flexible with respect to pay back; the terms are negotiated between the
local unit of government and private company involved. Loan maximum is
$400,000. (tied to the number of jobs created, usually $15,000/job). This
program is subject to change by the U.S. Congress. Terms cited were available
in 1995.
|
