United States

New application period announced for California Competes Tax Credit

Over $200 million in credits offered through three application periods

TAX ALERT  | 

On June 8, 2017, the California Governor’s Office of Business and Economic Development announced that the first application period for the California Competes Tax Credit (CCTC) for fiscal year 2017-2018 will open July 24, 2017, and will close on Aug. 18, 2017. Over $200 million of tax credits are available for the fiscal year.

The CCTC is an opportunity for businesses to apply for and negotiate California income tax credits based upon the number of jobs to be created or retained in California, as well as other investments to be made in the state. There will be two more application periods after the first closes. However, the next opportunity to apply will not be until 2018.

The CCTC is not limited to certain geographic enterprise zones and related zone-apportioned income and may be allocated to members within a combined group.

To qualify for a credit allocation, a business must:

  • Anticipate California employment growth over the next five years
  • Be considering relocating some or all business operations outside of California, or
  • Be considering expansion inside or outside of California

Takeaways

A number of factors contribute to whether credits may be awarded, such as number of new net jobs created, amount of compensation paid to employees, level of investments in equipment and property and location and demographics. Because the total amount of available credit is limited, businesses making California employee retention and expansion or investment decisions should consider starting the application process now. Interested taxpayers should speak to their tax advisors about navigating the application process.

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