DC Tax Benefits for Tech Companies

Someone recently pointed out a piece of legislation titled ‘The New E-Conomy Transformation Act of 2000′ (that was apparently passed) that benefits area tech companies.  It offers some serious tax breaks to local tech companies and goes above and beyond the benefits and incentives provided for small businesses.  Startups should find out if they qualify.  I look forward to seeing more from the DC government that will be business friendly. 

Here are the tax benefits (QHTC = Qualified High Tech Company):

“TAX BENEFITS

The various DC tax credits and other tax benefits available to a QHTC are – Tax Credits for:
• Costs of retraining qualified disadvantaged employees;
• Wages paid to qualified disadvantaged employees

(corporations only);
• Wages paid to qualified employees (corporations only); and
• Payments for or reimbursements of employee relocation costs (corporations only).

Other DC Tax Benefits:
• Exemption from sales and use tax;
• Reduction of the corporate franchise tax rate;
• Partial exemption from the personal property tax
• Exemption for 5 years from the DC corporate franchise tax when located in a designated high technology development zone;
• Deduction for Internal Revenue Code (IRC) section 179 expenses (up to $40,000);
• Deductions for leasehold improvements made by a QHTC

tenant;
• Exclusion of capital gains from taxation for qualified assets held more than 5 years;
• Rollover (deferral) of certain capital

Permitted Activities Include:
“1. Internet-related services and sales:
(a) Website design, maintenance, hosting, or operation;
(b) Internet-related training, consulting, advertising, or promotion services;
(c) The development, rental, lease, or sale of Internet-related applications, connectivity, or digital content; or
(d) Products and services that may be considered e-commerce;

2. Information and communication technologies, equipment and systems that involve advanced computer software and hardware, data processing, visualization technologies, or human interface technologies, whether deployed on the Internet or other electronic or digital media.

Such technologies, whether deployed on the Internet or other electronic or digital media, shall include:
(a) Operating and application software;
(b) Internet-related services, including design, strategic planning, deployment, and management services and artificial intelligence;
(c) Computer modeling and simulation;
(d) High-level software languages;
(e) Neural networks;
(f) Processor architecture;
(g) Animation and full-motion video;
(h) Graphics hardware and software;
(i) Speech and optical character recognition;
(j) High volume information storage and retrieval;
(k) Data compression; and
(l) Multiplexing, digital signal processing and spectrum technologies.

3. Advanced materials and processing technologies that involve the development, modification, or improvement of one or more materials or methods to produce devices and structures with improved performance characteristics or special functional attributes, or to activate, speed up, or otherwise alter chemical, biochemical, or medical processes. Such materials and technologies shall include:
(a) Metal alloys;
(b) Metal matrix and ceramic composites;
(c) Advanced polymers;
(d) Thin films;
(e) Membranes;
(f) Superconductors;
(g) Electronic and photonic reduction;
(h) Pharmaceuticals; bioactive materials; bioprocessing; genetic engineering; catalysts; waste emissions reduction; and
(i) Waste processing technologies;

4. Engineering, production, biotechnology and defense technologies that involve knowledge-based control systems and architectures; advanced fabrication and design processes, equipment, and tools; propulsion, navigation, guidance, nautical, aeronautical and astronautical ground and
airborne systems, instruments, and equipment.

Such technologies include:
(a) Computer-aided design and engineering;
(b) Computer-integrated manufacturing;
(c) Robotics and automated equipment;
(d) Integrated circuit fabrication and test equipment;
(e) Sensors;
(f) Biosensors;
(g) Signal and image processing;
(h) Medical and scientific instruments;
(i) Precision machining and forming;
(j) Biological and genetic research equipment;
(k) Environmental analysis, remediation, control and prevention equipment;
(l) Defense command and control equipment;
(m) Avionics and controls;
(n) Guided missile and space vehicle propulsion units;
(o) Military aircraft; space vehicles; and
(p) Surveillance, tracking and defense warning systems.

5. Electronic and photonic devices and components for use in producing electronic, optoelectronic, mechanical equipment and products of electronic distribution with interactive media content.

Such technologies include:
(a) Microprocessors;
(b) Logic chips;
(c) Memory chips;
(d) Lasers;
(e) Printed circuit board technology;
(f) Electroluminescent, liquid crystal, plasma and vacuum fluorescent displays;
(g) Optical fibers;
(h) Magnetic and optical information storage;
(i) Optical instruments, lenses, filters;
(j) Simplex and duplex data bases; and
(k) Solar cells.”