Chapter 409

2006 -- S 3157

Enacted 07/07/06

A N A C T

RELATING TO BIOTECHNOLOGY INVESTMENT TAX CREDIT

Introduced By: Senators Alves, and Paiva-Weed

Date Introduced: June 08, 2006

It is enacted by the General Assembly as follows:

     SECTION 1. Preamble: The purpose of this act is to encourage increased employment

opportunities and increased jobs in the biotechnology industry in Rhode Island, encourage

biotechnology investments, attract manufacturing activities of biotechnology corporations, and to

align the Rhode Island investment tax credit with the requirements of the biotechnology industry

by extending the effective period for investment tax credits earned by biotechnology

corporations.

     SECTION 2. Chapter 44-31 of the General Laws entitled "Investment Tax Credit" is

hereby amended by adding thereto the following section:

44-31-1.1.Biotechnology Investment Tax Credit. -- (a) Any company primarily

engaged in commercial biological research and development or manufacturing and sale of

biotechnology products or active pharmaceutical ingredients which pays its employees that work

a minimum of thirty (30) hours per week within the state a median annual wage equal or greater

than one hundred twenty-five percent (125%) of the average annual wage paid by all employers

in the state to employees that work a minimum of thirty (30) hours per week within the state, and

provides benefits typical to the biotechnology industry, shall be allowed a credit of ten percent

(10%) of the cost or other basis for federal tax purposes of tangible personal property and other

tangible property, including buildings and structural components of buildings acquired,

constructed, reconstructed, or leased with situs in Rhode Island and principally used in the

production of biotechnology products after December 31, 2001.

(1) “Biotechnology products” means those products that are applicable to the prevention,

treatment, or cure of a disease or condition of human beings, and that are produced using living

organisms, or materials derived from living organisms, or cellular, sub cellular, or molecular

component of living organisms.

(2) “Principally” means the company’s sales of biotechnology products or costs related to

the development of biotechnology products constitute at least fifty percent (50%) of its overall

receipts or its overall costs respectively.

(3) “Tangible personal property” and “other tangible property” includes buildings and

structural components of buildings acquired, constructed, reconstructed, or leased with situs in

Rhode Island and principally used in the production of biotechnology products after December

31, 2001 that:

(A) is depreciable pursuant to 26 USC. Section 167,

(B) has a useful life of four (4) years or more, and

(C) is acquired by purchase as defined in 26 USC section 179(d), or

(D) is acquired by lease based on the fair market value of the property at the inception of

the lease times the portion of the depreciable life of the property represented by the term of the

lease, excluding renewal options, for a term of twenty (20) years; and

(E) does not include vehicles or furniture

(4) “Wages” means all remuneration paid for personal services, including commissions and

bonuses and the cash value of all remuneration paid in any medium other than cash and all other

remuneration which is defined as taxable wages by the Internal Revenue Service, as certified by

the department of labor and training.

(b) If the amount of credit allowable for any taxable year is less than the amount of credit

available to the taxpayer, any amount of credit not used in the taxable year will be available the

following year or years not to exceed fifteen (15) years and may be deducted from the taxpayer’s

tax for the year or years.

(1) The credit may be extended beyond seven (7) years only in a year in which:

(A) The company maintains an average quarterly number of employees for each calendar

year that is nine and one-half percent (9.5%) percent greater than average quarter number of

employees in the fourth year of the initial credit. Employees are defined as those that work a

minimum of thirty (30) hours per week within the state with benefits typical to the biotechnology

industry;

(B) The company’s average quarterly median wage is not less than the company's

average of its quarterly median wage for the three (3) previous calendar years;

(C) The company pays its employees a median annual wage equal or greater than one

hundred twenty-five percent (125%) of the average annual wage paid by all employers in the

state. Employees are defined as those that work a minimum of thirty (30) hours per week within

the state with benefits typical to the biotechnology industry; and

(D) The department of labor and training certifies to the tax administrator that the criteria

in (A) through (C) have been met.

(2) Unused credits after the seventh year are forfeited permanently if any of these wage

and employment criteria are unmet after the seventh year.

(3) The company may determine the order in which the credits generated in different tax

years are utilized, provided that credits available for more than seven (7) years may not reduce

current year liability by more than seventy-five percent (75%); and provided further that in no

event, can liability be reduced below the minimum tax prescribed in section 44-11-2.

     SECTION 3. This act shall take effect upon passage and shall apply to taxable years

beginning on or after December 31, 2000.     

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LC03423

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