It is enacted by the General Assembly as follows:

SECTION 1. Section 42-64.3-3 of the General Laws in Chapter 42-64.3 entitled "Enterprise Zones" is hereby amended to read as follows:

42-64.3-3. Definitions. -- As used in this chapter, the following words and terms shall have the following meanings unless the context shall indicate another or different meaning or intent:

(a) "Council" or "Enterprise Zone Council" means the governmental agency created pursuant to section 42-64.3-3.1.

(b) "Enterprise zone", "economic revitalization zone" or "zone" means an economically distressed United States bureau of the census division or delineation in need of expansion of business and industry, and the creation of jobs which is designated to be eligible for the benefits of this chapter.

(c) "Governing authority" means the governing body of a state, city or town within which a qualified United States bureau of the census division or delineation lies.

(d) "Qualified business" or "business facility" means any business corporation, sole proprietorship, partnership, or limited partnership or limited liability company which:

(1) After the effective date of certification or annual recertification, {ADD its original application for membership in the enterprise zone program or the date annual membership is renewed, ADD} creates and hires a minimum of five percent (5%) new or additional enterprise jobs or in the case of a company having twenty (20) employees or less, this requirement shall be that the company create and hire one (1) new or additional enterprise job, in the respective zone during the same certification year; and

(2) Whose total Rhode Island wages including those Rhode Island wages for said additional enterprise jobs exceeds the total Rhode Island wages paid to its employees in the prior calendar year; and

(3) Obtains certificates of good standing from the Rhode Island division of taxation, the corporations division of the Rhode Island secretary of state and the appropriate municipal tax collector {ADD authority ADD} at the time of certification or annual recertification; and

(4) Provides the council an affidavit stating under oath that the entity seeking certification as a qualified business has not within the preceeding twelve (12) months from the date of application for certification changed its legal status for the purpose of gaining favorable treatment under the provisions of chapter 42-64.3 et seq.; and

(5) Meets certain other requirements as set forth by the council; and

(6) Has received certification and annual recertification from the council pursuant to the rules and regulations promulgated by the council.

{ADD In the event that an applicant for certification meets the criteria of (d)(1), (d)(3), (d)(4), (d)(5) and (d)(6) set forth above, but fails to meet the requirements of (d)(2) solely because the amount of wages paid to the owner or owners of said business has decreased from the prior calendar year, the Council may, for good cause shown, certify said applicant as a qualified business. The applicant shall have the burden to show, notwithstanding its failure to meet the requirements of subsection (d)(2) above, that the applicant has met the intent of this chapter. For the purposes of this provision, owner shall mean a person who has at least twenty percent (20%) of the indicis of ownership fo said applicant.

(e) "Effective Date of Certification" means the date upon which the qualified business meets the tests imposed in subdivision (d) 1 through 6 above and applies to the calendar year for which these tests were performed. ADD}

(e) {ADD (f) ADD} "Enterprise job employees" means those full-time employees whose business activity originates and terminates from within the enterprise zone business and facility on a daily basis and who are domiciled residents of the state and hired and employed by the qualified business in the enterprise zone after the effective date of certification or annual recertification in excess of those full-time employees employed by the qualified business in any Rhode Island enterprise zone in the prior calendar year. An employee who is hired and terminated in the same certification period does not constitute an enterprise job employee.

(f) {ADD (g) ADD} "Wages" means wages, tips and other compensation as defined in the Internal Revenue Code of 1986.

SECTION 2. Section 42-64.3-6 of the General Laws in Chapter 42-64.3 entitled "Enterprise Zones" is hereby amended to read as follows:

42-64.3-6. Business tax credits. -- A qualified business in an enterprise zone shall be allowed a credit against the tax imposed pursuant to chapters 11, 13 ›except the taxation of tangible personal property under section 44-13-13!, 14, 17 and 30 of title 44 as hereinafter provided:

(a) During the first five (5) years of zone designation a credit equal to fifty percent (50%) of the total amount of wages as are paid to those enterprise job employees comprising the five percent (5%) new jobs referenced in section 42-64.3-3(d) the wages subject to the credit shall be reduced by any direct state or federal wage assistance in the taxable year. The maximum credit allowed per taxable year under the provisions of this subsection shall be ten thousand dollars, ($10,000) per employee. A taxpayer who takes this business tax credit shall not be eligible for the resident business owner modification pursuant to section 42-64.3-7.

(b) Any tax credit as hereinbefore provided in subdivision (a), shall not offset any tax liability in taxable years other than the year in which the taxpayer qualifies for the credit. The credit shall not reduce the tax below the minimum tax. {ADD Fiscal year taxpayers must claim the tax credit in the year into which the December 31st of the certification year falls. ADD} The credit shall be used to offset tax liability pursuant to the provisions of either chapters 11, 13, 14, 17 or 30 of title 44, but not more than one chapter.

(c) In the case of a corporation, the credit allowed under this section shall only be allowed against the tax of that corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return.

(d) In the case of multiple business owners, the credit hereinbefore provided in subdivision (a) shall be apportioned according to the ownership interests of the qualified business.

SECTION 3. Section 42-64.3-8.1 of the General Laws in Chapter 42-64.3 entitled "Enterprise Zones" is hereby amended to read as follows:

42-64.3-8.1. Interest income credit. -- A taxpayer shall be allowed a ten percent (10%) credit against taxes due under the provisions of chapter 11, 13, 14, 17, or 30 of title 44 for interest earned {ADD and received ADD} on loans made to qualified businesses {ADD the proceeds of which are used solely and exclusively ADD} in the zone, after the effective date of designation of the zone, provided:

(a) The taxpayer shall be allowed a maximum credit of ten thousand dollars ($10,000) per taxable year.

(b) Any tax credit as herein provided shall not offset any tax liability in taxable years other than the year in which the taxpayer qualifies for the credit. The credit shall not reduce the tax below the minimum. The credit shall be used to offset tax liability pursuant to the provisions of only one of the aforementioned chapters of title 44, but not both.

(c) Provided, further, that a one hundred percent (100%) credit against taxes due under chapter 11, 13, 14, 17, or 30 of title 44 for interest earned on loans made for the rehabilitation of council certified industrial or commercial property {ADD located in the zone ADD} after the effective date of designation of the zone for use in construction, expanding or rehabilitation of industrial or commercial real property shall be allowed provided that the amount of the loan shall be a minimum of twenty-five percent (25%) of the basis {ADD qualified business' book value ADD} of the real property and said credit shall not be counted against the maximum credit provided in subsection (a), but shall be limited to twenty thousand dollars ($20,000) per taxable year.

(d) In the case of a corporation, the credit allowed under this section shall only be allowed against the tax of that corporation included in a consolidated return that qualifies for the credit and not against the tax of other corporations that may join in the filing of a consolidated tax return.

SECTION 4. This act shall take effect upon passage and effective with the 1996 certification year.