The South Carolina Ports Authority is able to offer clients powerful tax credits for increasing volume via South Carolina port facilities and/or making certain port-dependent capital investments. Below is a brief summary of these incentives.
VOLUME INCREASE INCENTIVE:
To qualify for the incentive, the client must have employees in South Carolina and be paying payroll withholding taxes or corporate income tax.
After the establishment of a base year of volume, the client could receive up to $200 per FEU or $100 per TEU based on incremental growth. Provisions are in place for non-container clients.
The company can apply for the payroll tax credit any year it grows its volume by at least five percent (5%) via a South Carolina Port.
The origin/destination of the cargo is not a determining factor.
The tax credit is delivered as cash refund from the SC Department of Revenue to be used however the client sees fit.
If the refund exceeds the company’s payroll tax liability for the taxable year, the excess amount may be carried forward and claimed against withholding taxes or corporate income taxes over the next five succeeding taxable years.
The client is required to track and report their own volumes.
VOLUME INCENTIVE EXAMPLE:
Client A has several Southeast U.S. facilities including a manufacturing & distribution operation in South Carolina that employs 200 workers. In Year 1 the client moved 10,000 FEU, of which 1,000 FEU moved via the Port of Charleston.
Client A establishes Year 1 as its base Port of Charleston volume.
In Year 2, the client increases its volume via the Port of Charleston from 1,000 to 5,000 FEU. Some of that volume was delivered to the South Carolina facility, but not all of it.
After documenting Year 2 volume via the Port of Charleston, Client A may apply for and receive a payment from the State of South Carolina for up to $800,000 (4,000 FEU increase X $200/FEU = $800,000). If the amount exceeds the client’s annual payroll tax liability the excess may be carried forward to subsequent years.
Client A may apply for the credits again in Year 3 provided its volume increases by more than 5% over Year 2.