Incentives by Local Governing Bodies

New and existing manufacturers, research and development firms, warehouse/distribution and certain high technology companies in Washington can benefit from several targeted tax incentives. These incentives are intended to encourage the preservation and creation of family-wage jobs.

New Business Sales / Use Tax Exemption
• Eligible Candidates: Manufacturers, Processors For Hire, and Manufacturers whom perform research and development in the state of Washington. A "manufacturing operation" means the manufacturing of articles, substances, or commodities for sales as tangible personal property. The manufacturing operation begins at the point where the finished product leaves the manufacturing site.
• Incentive: For qualifying industries, a 100 percent exemption of sales and use tax on machinery and equipment used directly in the manufacturing or research operations. Charges for labor and services for installing the machinery and equipment are also exempt from the sales and use tax. Charges for repair labor and parts (if the parts have a useful life of at least one year), cleaning, altering, or improving the qualified machinery and equipment are also exempt from sales and use taxes.

Warehousing Sales & Use Tax Exemption
Cowlitz County now offers a tax incentive for warehouse and grain operations that meet certain criteria. Wholesalers, third party warehouses, grain elevator operators and distribution centers are included.
• Eligible Candidates: Eligible warehouse operations may receive tax incentives on material handling and racking equipment; labor services rendered in installing, repairing, cleaning, altering, or improving the equipment; and construction including materials, service and labor costs.
• Incentives:
Warehouses over 200,000 square feet are exempt on 100 percent of sales/use tax for construction costs and 50 percent of machinery and equipment purchases.
Grain elevators with capacities between one million and two million bushels receive a 50 percent sales and use tax exemption on machinery, equipment and construction.
Grain elevators larger than two million bushels receive a 100 percent sales tax exemption on construction and a 50 percent sales tax reduction on machinery and equipment.

Distressed County Manufacturing Sales and Use Tax Exemption
In addition to the New Business Sales and Tax Exemption, Cowlitz County also grants an additional sales/us tax waiver for manufacturing, research and development, or computer related businesses (excluding light and power businesses) locating in Cowlitz County.
• Eligible Candidates: The business must locate in Cowlitz County and invest in facility construction, expansion, or machinery and equipment. The machinery and equipment must be new to the business or the state and be necessary for the operation of the eligible business activity. Used machinery qualifies and a new building is not required. Expansion or modernization of an existing facility qualifies if floor space or production capability is increased. Construction costs for a qualified leased building are eligible for the program.
• Incentive: For qualifying industries, the sales/use taxes are fully exempted on building construction/equipment and construction labor.

High Technology Sales/Use Tax Exemption
Businesses in the following research and development technology categories

• Advanced Computing
• Advanced Materials
• Biotechnology
• Electronic Device Technology
• Environmental Technology

may be eligible for a sales/use tax exemption if they start new research and development or pilot scale manufacturing operations, or expand or diversity a current operation by expanding, renovating or equipping an existing facility in Cowlitz County.
• Eligible Candidates: The investment project must be devoted to research and development or pilot scale manufacturing to qualify for this exemption. The investment must consist of machinery and equipment, new structures, and/or expansion or renovation to increase floor space or production capacity. The machinery and equipment may be used, but must be new to the state or to the business.
Qualified machinery and equipment means fixtures, equipment and support facilities that are an integral and a necessary part of pilot scale manufacturing or qualified research and development operation. Included are computers, software, data processing equipment, laboratory equipment, instrumentation, and other devices used in the process of experimentation to develop a new or improved pilot model, plant process, product, formula, invention or similar property. If a building, machinery, or equipment is used partly for pilot scale manufacturing or qualified research, and partly for other purposes, the tax deferral will be apportioned on the basis of the cost of the area used for the qualified purpose.
• Incentive: An complete sales/use tax exemption is available to high technology companies meeting the eligibility requirements.

Distressed Area Business & Occupation Tax Credits
Cowlitz County provides a $2,000-$4,000 per employee credit against the B&O tax for each new employment position created and filled by certain businesses locating in Cowlitz County.
• Eligible Candidates: The business must be a manufacturing, research and development, or computer-related service business (excluding light and power business) that locates or expands in Cowlitz County.
• Incentive: For new jobs paying less then $40,000 annually, including benefits, the tax credit is $2,000 per employee. For new jobs paying more than $40,000 or more annually, including benefits, the tax credit is $4,000 per employee. There is no tax credit limit under this program. An employee "in training" qualifies as filling a position. The positions must be new. Positions may not be transferred from an established site in Washington to a new site unless the vacated positions are filled. Remaining B&O tax credits may be used in later years until the credit is exhausted. An application must be filed with the Department of Revenue before filling the new positions.

Distressed County Business & Occupation Tax Credit
An additional new B&O Tax credit is available to businesses which have received approval for the Distressed Area Sales/Use Tax Deferral Exemption Program.
• Eligible Candidates: The business must locate in Cowlitz County and receive approval for the Distressed Area Sales/Use Tax Deferral Exemption Program. The business must also provide employee job training to their employees at no cost to the employees.
• Incentive: The maximum annual credit a business may use is $5,000. The credit is computed by multiplying the approved training cost by 20 percent.

High Technology Business & Occupation Tax Credits
Businesses that perform research and development in Washington in specified high technology categories and meet the minimum expense requirements are eligible for business and occupation tax credits of up to $2 million per year
• Eligible Candidates: The technology categories that qualify are:

• Advanced Computing
• Advanced Materials
• Biotechnology
• Electronic Device Technology
• Environmental Technology

The rate of the credit for nonprofit corporations is .515 percent (.00515) of expenses, and for profit corporations, the rate is 2.5 percent of expenses. The business' spending on research and development during the year the credit is claimed must exceed .92 percent (0.0092) of the business' taxable amount during that same year. Spending for research and development includes operating expenses, wages and benefits, supplies, and computer expenses directly incurred while conducting the research and development.
• Incentive: Qualifying businesses are eligible for tax credits of up to $2 million
per year.

Distressed County High Tech Business & Occupation Tax Credits
SSB 6470 provides a credit for tax otherwise due for persons engaged in the business of the creation, distribution, wholesaling, or warehousing of canned or custom software.
• Eligible Candidates: The business must be located in Cowlitz County and involved in the creation, distribution, wholesaling, or warehousing of canned or custom software.
• Incentive: Qualifying businesses are eligible for a 100% tax credit exemption against any income generated from the above activities for a period of 36 months. For taxes payable on income received after the first thirty-six months, the amount of the credit shall equal ninety percent (90%) of the amount of tax otherwise due under this section for businesses engaged in the creation or distribution of canned or custom software. For businesses engaged in the wholesaling or warehousing of canned or custom software, the tax credit after 36 months shall equal seventy percent (70%) of the tax otherwise due.

Rural Enterprise Zone
Cowlitz County now has the capability of establishing rural communities enterprise zone program under guidelines established by the Department of Community, Trade, and Economic Development.
• Eligible Candidates: Businesses must located within Cowlitz County.
• Incentive: The rural enterprise zone designation allows businesses expanding in Cowlitz County access to in-depth assistance from the Washington State Department of Community Trade and Economic Development. The zones are established to facilitate aggressive business recruiting, infrastructure development, and streamlined zoning, permitting and regulatory requirements in order to rapidly respond to business growth opportunities.

Projects of Statewide Significance
Cowlitz County offers a program that expedites the development of industrial projects of statewide significance.
• Eligible Candidates: Businesses must locate within Cowlitz County and invest at least $90 million to trigger the program.
• Incentive:: The Washington State Department of Trade and Economic Development will assign an ombudsman to the project responsible for all aspects of planning, permitting, infrastructure development, work force training, transportation services, school districts, and the provision of utilities. Additional state funding may also be available on a project specific basis.

Labor Force Training
Cowlitz County offers a variety of customized job training programs for new and expanding businesses.
• Eligible Candidates: Business must be located in Cowlitz County. Both new and existing businesses are also eligible for funds and training. Amounts depend upon requirements and the number of available job positions.
• Incentive: A qualifying business can expect, at a minimum, the following company specific training funding: