 |
 |
New E-conomy Transformation Act (NET 2000) The District offers one of the most attractive incentive packages for high-tech businesses in the country. The New E-conomy Transformation Act of 2000 (NET 2000), effective January 1, 2001, provides certain credits, exemptions and other benefits for a Qualified High Technology Company (QHTC). A QHTC can leverage the NET 2000 Act to develop their workforce, secure affordable facilities for their business and benefit from reduced real estate, personal property, sales and income taxes. To learn more please continue reading or visit the Technology Initiative and "NET 2000" Incentives section on the Office of Planning & Economic Development's webpage.
Claiming NET 2000 Benefits
To qualify as a QHTC, a business will need to attach the following forms to any tax return claiming the benefits of NET 2000. You may obtain these forms online at www.dcbiz.dc.gov or www.cfo.dc.gov, or you may contact the District's Office of Tax & Revenue, Tax Form Center at (202) 442-6546.
| Form # | Title | | Publication 399 | Qualified High Technology Companies – description of and forms for claiming tax benefits | | QHTC-CERT 2001 | Certification for Qualified High Technology Company Form | | D-20CR | Business Tax Credits Form (file with form D-20) | | D-30CR | Business Tax Credits Form (file with form D-20) | | D-20CR | Claim for Refund of Retraining Costs Form | | FP-331/337 | Claim for Refund of Sales & Use Tax, Exempt Purchase Certificate Forms |
NET 2000 Eligibility Requirements
To be considered a qualified high technology company (QHTC), a compa-ny
must meet the following criteria:
- Must be an individual or for-profit entity with two or more employees;
- Maintaines and office, headquarters, or base of operations in DC; and
- Derives 51% or more of gross revenues from a high tech business as defined in the law.
Please note that there are 64 QHTC activities under NET 2000, and a company must derive at least 51% of its income from one or more of these activities. To see a complete list of the QHTC activities, please visit www.dcbiz.dc.govand go to "Citywide Economic Incentives."
High-Technology Development Zones
The District of Columbia's High Technology Development Zones are designated high priority areas of the District. To determine whether a business is located in a high technology zone, you may go to www.dcbiz.dc.gov, click on the map logo and then click "Tech Zones," or call the Office of Tax and Revenue's Office of the General Counsel at (202) 442-6500.
It is worth noting that DC'S high-tech zones include all of DC's Enterprise Zones (EZ). So if your business is in an EZ, you are also in a high-tech zone and can qualify for both the federal and local business incentives.
NET 2000 Financial Incentives
QHTC can expect a significant tax break with the following tax abatements.
Franchise Tax Reduction or Exemption
- Zero franchise tax on unincorporated technology business
- Five-year elimination of franchise tax on incorporated technology companies located within the High Technology Development Zones
- Reduced franchise tax of 6% for incorporated tech companies located outside of the tech zones but within the District of Columbia
Real Property Tax Abatement
- A five-year abatement of increases in property tax rates attributable to renovations to accommodate technology companies and for certain newly constructed buildings
Personal Property Tax Abatement
- A ten-year exemption of personal property taxes on certain purchases made after December 31, 2000
- An allowance of up to $40,000 in personal property expense deductions
Sales and Use Tax Exemption
- Elimination of DC sales tax on certain sales to eligible companies
- Sales by eligible companies of certain intangible property or services are not taxable
Capital Gains Tax Exemption
- An exemption from District taxation of certain capital gains from the sale, exchange or rollover of stock, partnership interests and other assets of qualified high tech companies held for a minimum of five years
Workforce Development Credits
NET 2000 provides credits to the franchise tax for wages paid and certain expenditures made on behalf of employees:
- Relocation Expense Reimbursement
For companies that move at least two full-time jobs to DC.
- A credit of $5,000 per employee for reimbursement of employee moving expenses capped at $250,000 per company per year
- A credit of $7,500 per employee for reimbursement of employee moving expense and payments for the employee’s lease or purchase of a primary residence if the employee relocates to DC from outside DC, capped at $1,000,000 per company per year
- Wage Credit
You may claim credit of 10% of wages paid for the first 24 months of employment, up to $5,000 per employee per year
- Training and Wage Credits
For employees that are recipients of Temporary Aid For Needy Families (TANF) or ex-offenders; also applies to employees for which the company may claim the Welfare-to-Work Tax Credit or the Work Opportunity Tax Credit (see explanations for those in Financial Incentive Programs).
- A credit for each employee of up to $20,000 for costs of approved training during the first 18 months of employment
- A credit of 50% of wages paid for the first 24 months of employment, up to $15,000 per employee per year
TIP
You may use the online Tax Calculator at www.dcbiz.dc.gov to estimate your tax savings and read a hypothetical case study to understand how the new incentives might benefit your business.
NET 2000 Contact
If you have questions about your eligibility as a QHTC under the NET 2000 Act, please contact the Office of Tax and Revenue’s Office of the General Counsel at (202) 442-6509, or refer to DC Law 13-256 and related regulations to determine eligibility.
Back to top |
|
|
|
|
 |
|
