The Department of Revenue administers a variety of taxes that affect companies based inside and outside of Alabama. Before transacting business in Alabama, a foreign corporation (corporation incorporated outside of Alabama) must qualify with the Alabama Secretary of State. Foreign corporations must file an application for certificate of authority (form CD-2) with the Alabama Secretary of State along with a certified copy of the articles of incorporation and must pay a $175 qualification fee.
In order to form a domestic corporation (a corporation incorporated inside of Alabama), the corporate name must first be reserved with the Alabama Secretary of State. Then, articles of incorporation must be filed with the probate judge of the county in which the corporation has its initial registered office. The fees for filing articles of incorporation are $50 for the Alabama Secretary of State and $35 for the probate judge.
PROPERTY TAXES AND SALES AND USE TAX INCENTIVES
The Tax Incentive Reform Act of 1992 was enacted to provide tax abatements as an incentive to attract new industries and encourage existing industries to expand in Alabama. An abatement of non-educational sales and use taxes and non-educational property taxes on industrial development property may be granted for a new project or a major addition.
A new project is any business at which the predominant trade or business activity conducted will constitute an industrial or research enterprise in Alabama. A major addition is an addition to an existing facility in which the addition equals the lesser of 30 percent of the original cost of the existing land, building, and equipment (industrial development property) or $2 million, and at which the predominant trade or business activity conducted will constitute an industrial or research enterprise in Alabama.
Income Tax Incentives
This credit is available to small business that creates new jobs paying more than ten dollars per hour. A small business is defined as a business that employs 50 or fewer employees. The credit shall equal $1,000 for each qualifying new employee. The credit is available in the tax year during which the employee has completed 12 months of consecutive employment. The employer must have a net increase in the total number of full time employees in Alabama on the last date of each tax year during which employees are hired for which the employer claims a credit, over the number employed in Alabama as of the last day of the tax year immediately preceding the first employment year. The increase must equal or exceed the number of newly hired employees for which a credit is sought by one employee for each newly hired employee for whom a credit is being sought for the current year, plus one employee for all employees for whom credits were claimed in prior years.
Deductions for Small Business Health Insurance Premiums
A business must create at least 50 new jobs to be eligible for the jobs credit incentive, unless it is a qualifying business in chemical manufacturing, data center, engineering design or research, or metal/machining technology or tool making industries, which may be eligible by creating any number of new jobs. The job credit may be taken each year for 10 years against utility taxes in an annual amount of 3 percent of eligible employees’ paid wages during the previous year. If unused credits remain in a certain year, the business may carry forward the credits for 5 years.
The Industrial Development Grant Program provides grants to counties, municipalities, local industrial development boards or authorities or economic development councils or authorities, airport authorities, port authorities or public corporations or political subdivisions, departments or agencies of this state authorized to own or possess by lease a project site. In order to be eligible for an Industrial Development Grant, the grantee must hold title to the project site that the qualifying project will occupy. Funds may be used for site preparation to attract a new industry or to assist an existing company with an expansion. The size of the grant depends upon the amount of capital investment.
The grant is based upon total project cost with the maximum amount available capped at $150,000. (Alabama Act No. 99-591)
AlabamaSAVES is an innovative financing program that leverages funds from private lenders to provide an estimated pool of $65 million for low interest rate loans to implement energy efficiency improvements and install renewable energy systems at existing private commercial, industrial and institutional facilities in Alabama. Allowable expenditures for loan funds include equipment and equipment installation labor costs for energy efficient fixtures and retrofits and renewable energy systems. Funding from the program is for retrofits of existing properties and not for new construction. AlabamaSAVES offers subsidies for approved borrowers in the form of an interest rate buy down to a current floor of 1% for loans from participating lenders or a direct loan with a fixed interest rate, currently at 2%.
- Loan term: The blended useful life of improvements up to a maximum of 10 years
- Loan range: $50,000 - $4,000,000
- Use of proceeds: Loan funds can be used for up to 100% of costs remaining after applicable tax credits, grants or other subsidies
TVA Incentive Programs
TVA offers a unique range of economic incentives that will benefit a project from start-up to long-term success in the Shoals. Valley Incentive Programs determine appropriate funding levels by considering both economic and power systems metrics to create a profile for a company’s value to the area.
Training and Workforce Development
The Alabama Technology Network (ATN) is part of the Alabama Community College System and has a team of experts who helps solve the needs of industry and business through innovative, sustainable, cost effective solutions. ATN can conduct detailed needs assessments, outline potential solutions based on the results, and then provide technical assistance to help businesses solve those problems or identify those who can.
ATN is comprised of regional centers that tailor services to meet local needs while providing innovative and cost-effective solutions to enable Alabama’s existing industry to be globally competitive. Alabama manufacturers can receive assistance in the following:
- Lean Manufacturing
- Environmental Safety and Health
- Quality Systems
- Business Services/Strategic Management
- Quality Engineering
- Industrial Maintenance
- Information Technology
- Engineering and Technical Services
- Human Resources and Organizational Development
ADEM Permit & Services Division (334) 271-7714
Right to Work State
Alabama is a “right to work” state.