The Carrington Community Development Corporation works closely with local financial institutions, the North Dakota State Economic Development Commission, the Bank of North Dakota and other capital sources to seek funding for new and expanding businesses.
Property Tax Exemption
Any new or expanding business project may be granted a property tax exemption for up to five years. Two extensions are available:
- Agricultural processors may be granted a partial or full exemption for up to five additional years.
- A project located on property leased from a government entity qualifies for an exemption for up to five additional years upon annual application by the project operator.
In addition to, or instead of, an exemption, local governments and any project operator may negotiate payments in lieu of property tax for a period of up to 20 years from the date project operations begin.
To qualify, a project must be a new or expanded revenue producing enterprise. All buildings, structures or improvements used in, or necessary to, the operation of the project qualify. The structure might be the project's buildings or the project's quarters within a larger building. Land does not qualify for an exemption.
A project is not eligible for an exemption if:
- a tax exemption was received under tax increment financing, or
- the governing body determines the exemption fosters unfair competition or endangers existing business.
Sales Tax Exemptions
A new or expanding plant may exempt machinery or equipment from sales and use taxes if it is:
- used primarily for manufacturing or agricultural processing, or
- used solely for recycling.
The expansion must increase production volume, employment, or the types of products that can be manufactured or processed.
The manufacturer must receive prior approval from the State Tax Commissioner to qualify for the exemption at the time of purchase. If prior approval is not received, the manufacturer must pay the tax and then apply to the State Tax Commissioner for a refund.
The exemption is not available to contractors. Manufacturers may apply for a refund of the appropriate portion of the tax actually paid by contractors on eligible machinery and equipment.
Income Tax Exemption
A new or expansion project in a primary sector business or tourism qualifies for an income tax exemption for up to five years. "Primary sector business" means an enterprise, which creates wealth by using knowledge or labor to add value to a product, process, or services. The exemption is limited to income earned form the qualifying project. The project operator must file a state income tax return even though an exemption is granted.
Job Training Assistance
A program is available that assists a new or expanding primary sector business with training new employees. The cost of the training under the program is paid for in whole or in part with the income tax withheld from the new employees. For more information about this program, contact Job Service North Dakota/P O Box 5507/Bismarck, ND 58506/(701) 328-2814.
The 1999 legislature authorized the creation of Renaissance Zones within North Dakota communities. These geographical zones are managed and approved by local zone authorities with the concurrence of the North Dakota Division of Community Services. Businesses and individuals that choose to locate in or develop a designated zone project may qualify for a number of income and property tax credits and exemptions. For more information on Renaissance Zones, please call your local zone authority, the Division of Community Services, or the Office of State Tax Commissioner.
You'll find plenty of reasons why North Dakota is a great place to do business. Here are just a few:
- Unlike most states, North Dakota has federal income tax deductibility for corporation income tax.
- Our individual income tax burden is computed as 14 percent of the taxpayer's federal tax liability and is generally considered the lowest of any state that levies an income tax.
- In North Dakota you don't have to pay tax on the sales of many items that other states tax. For example, sales taxes do not apply to electricity, most professional services and groceries. Your cost of doing business is lower in North Dakota.
- We have some of the most affordable workers compensation and unemployment insurance tax rates in the nation.
Income Tax Incentives
Wage and Salary Credit
A corporation doing business in North Dakota for the first time may take an income tax credit equal to:
- 1% of all wages and salaries paid the first three years of operation; and
- 1/2% of wages and salaries paid in the fourth and fifth years.
Want to know more about doing business in North Dakota? Contact the Department of Economic Development and Finance at: www.growingnd.com