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Promoting Virginia’s international trade

Virginia port tax credits and grant program encourage agriculture, manufacturing and distribution.
July 5, 2022

By Russell Held

The Port of Virginia is a unique collection of marine and inland cargo terminals situated in the Mid-Atlantic within one day’s drive of two-thirds of the nation’s population. The finished goods, raw materials, components and consumables that people, businesses and industry use every day move across docks of this port. As a major gateway to global trade, The Port of Virginia continues to gain traction as an essential cog in the economic development machine, both regionally and statewide. The port has proven itself a significant asset for existing Virginia businesses as well as international firms seeking strategic, advantageous expansion, relocation or investment opportunities.

The positive economic impact of this reaches organizations and individuals on multiple levels, locally and statewide, and is no coincidence. A study published by the College of William & Mary’s Raymond A. Mason School of Business in December 2014 highlighted the economic importance of the port in fiscal year 2013. The study found the port generated $60 billion in in-state spending, accounting for 6.8 percent of Virginia’s 2013 gross state product (GSP). Moreover, the research shows that the port provided more than 374,000 jobs (direct, indirect and induced) amounting to 9.4 percent of the Commonwealth’s resident employment that year. Total compensation for that labor force was $17.5 billion.

During the 2011 session, the Virginia General Assembly enacted legislation establishing three Port Tax Credits and a Port Development Grant to incentivize Port of Virginia cargo volume growth and economic development for the Commonwealth. During the 2016 session, the Virginia General Assembly extended the sunset dates of the three Port Tax Credits to 2022. Although all three credits offer incentives related to port activities, each credit is mutually exclusive and separate definitions and requirements apply to each credit. A taxpayer may qualify for more than one credit in the same year, but cannot claim more than one credit for the same activity. Below are descriptions of the port tax credit and grant programs.

Port Volume Increase Tax Credit (Code of Virginia Section 58.1-439.12:10)

  • Tax credit for taxpayers engaged in the manufacturing of goods or the distribution of manufactured goods, agricultural entities or mineral or gas entities that use public or private port facilities located in Virginia and increase port cargo at these facilities by a minimum of 5 percent in a single calendar year over their base year cargo volume.
  • The base year is either the preceding tax year or the first year a company moves 10 20-foot Equivalent Units (TEU) or 75 non-containerized tons, or 10 units of roll on-roll off cargo through a public or private port terminal in Virginia.
  • Volume increase requirement waived for a new major facility. This is a facility to be located in Virginia that is projected to import/export cargo through a Virginia port in excess of 25,000 TEUs in its first calendar year.
  • Credit is $50 per TEU or unit of roll-on roll-off cargo in excess of the base year cargo; tonnage conversion rate is 16 tons = 1 TEU.
  • Major facilities receive a credit of $50 per TEU during the facility’s first calendar year.
  • Credit can be claimed against Virginia individual or corporate income tax.
  • Available for taxable years beginning Jan. 1, 2011, but before Jan. 1, 2022, there is a cap of $250,000 per taxpayer or more if there is excess money in the pot or less if the pot is oversubscribed. The cap is $3.2 million per calendar year and the remainder can carry forward for up to five years.
  • Taxpayers can apply to the Port of Virginia using Form PVI by March 1 following the calendar year during which the credits were earned.

Barge and Rail Usage Tax Credit (Code of Virginia Section 58.1-439.12:09)

  • Tax credit for usage of barge or rail to move cargo to or from public or private port terminals in Virginia rather than by truck or other motor vehicle on Virginia’s highways (must be international cargo).
  • The credit is $25 per TEU, 16 tons of non-containerized cargo or unit of roll-on roll-off cargo in excess of the number of containers shipped by barge or rail by the taxpayer during the immediately preceding taxable year.
  • The credit can be claimed against Virginia individual income tax, corporate income tax, tax on estates and trusts, bank franchise tax, insurance premiums tax and the tax on public service corporations.
  • Available for taxable years beginning on and after Jan. 1, 2011, but before Jan. 1, 2022, there is a cap of $500,000 per fiscal year, with no cap per taxpayer. The remainder can carry forward for up to five years.
  • You can apply to the Virginia Department of Taxation using Form BRU by April 1 of the year following the taxable year during which the credits were earned.

International Trade Facility Tax Credit (Code of Virginia Section 58.1-429.12:06)

  • Tax credit for either creating new jobs or capital investment in an international trade facility as a result of moving 5 percent more cargo through public or private port terminals in Virginia than in the preceding taxable year.
  • The credit is either $3,500 per qualified full-time employee or an amount equal to 2 percent of qualified capita investment expenses.
  • The credit can be claimed against Virginia individual or corporate income tax.
  • Available for taxable years beginning Jan. 1, 2011, but before Jan. 1, 2022, there is a cap of $1.25 million per fiscal year and no cap per taxpayer. The amount of the credit allowed shall not exceed 50 percent of the tax imposed for the taxable year and the remainder can carry forward for up to 10 years.
  • You can apply to the Virginia Department of Taxation using Form ITF by April 1 of the year following the taxable year during which the credits were earned.
  • You cannot claim the same jobs for this credit, Major Business Facility Job Tax Credit or the POV Grant.

Port of Virginia Economic and Infrastructure Development Grant

The Port of Virginia Economic and Infrastructure Development Grant Program provides a POV Grant to certain qualified companies to incentivize them to locate new maritime-related employment centers or expand existing centers in the Commonwealth. The grant program encourages and facilitates the growth of the Port of Virginia in accordance with criteria established by legislation.

A business entity that meets all four criteria listed below is eligible for a cash grant from the Port of Virginia Economic & Infrastructure Development Grant (POV Grant) per 62.1‐132.3:2 of the Code of Virginia and subject to appropriation:

  1. Locates or expands a facility within the Commonwealth of Virginia.
  2. Creates at least 25 new, permanent full‐time positions for qualified full‐time employees at a facility within the Commonwealth from commencement of the project through the first full year of operation within the Commonwealth or during the year when the expansion occurs.
  3. Is involved in maritime commerce or exports or imports manufactured goods through the Port of Virginia; and
  4. Is engaged in one or more of the following: the distribution, freight forwarding, freight handling, goods processing, manufacturing, warehousing, crossdocking, transloading or wholesaling of goods exported and imported through the Port of Virginia; ship building and ship repair; dredging; marine construction; or offshore energy exploration and extraction.

 

The amount of the grant is calculated by the following formula:

25–49 new jobs: $1,000 per job

50–74 new jobs: $1,500 per job

75–99 new jobs: $2,000 per job

100+ new jobs: $3,000 per job

The maximum amount of grant allowable per qualified company is $500,000. To receive the grant, a qualifying company must apply to the Virginia Port Authority no later than March 31 in the year immediately following the first full year of operation or expansion within Virginia. The qualifying company must also agree to maintain the jobs at the facility within the Commonwealth for each of the three years following the receipt of the grant by entering into a Memorandum of Understanding with the Virginia Port Authority. In the event that the company fails to maintain the job number during any of those three years, it will be required to pay all or a portion of the grant back to the Virginia Port Authority.

To learn more or to apply for a Port of Virginia Grant or Tax Credit, visit: portofvirginia.com.

 

Russell Held is the vice president of economic development for the Port of Virginia.