South Carolina Legislative Update: Port Cargo Volume Increase Tax Credit
On May 13, South Carolina Governor Henry McMaster signed into law a bill (S.B. 439) to increase the maximum amount of available tax credits for a port cargo volume increase. Most notably, the law will: (i) increase the maximum amount of the available tax credits for each calendar year from $8 million to $15 million; (ii) provide a “port transportation credit” for the costs of transporting freight, goods and materials to and from port facilities in South Carolina; and (iii) clarify that a “port facility” is a “distribution facility” for purposes of certain sales and use tax exemptions. A copy of S.B. 439 can be found here.
The Port Cargo Volume Increase Tax Credit is an existing program in South Carolina. This state discretionary incentive is a powerful tool providing a possible credit against income taxes or withholding taxes to companies that use the South Carolina ports and increase base port cargo volume by 5% over base-year totals. One of the requirements of eligibility is that a company must have, for its “base year,” 75 net tons of non-containerized cargo, 385 cubic meters or 10 loaded TEUs (i.e., twenty-foot equivalent units, a unit of measure for cargo containers) transported through a South Carolina port. To qualify, a company must complete an application and go through an approval process with the South Carolina Coordinating Council for Economic Development, which determines eligibility and the amount and type of credit the company may receive.
Increasing the maximum amount of the available annual tax credit significantly strengthens what is already a powerful state incentive for companies that utilize South Carolina’s growing network of ports.