Legislative session continues

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MHTA – Despite their best efforts, legislative leaders and the Governor were unable to resolve their differences in time for their self-declared April 30 deadline to adjourn. They are continuing to negotiate an end of session deal that could include tax, bonding and stadium bills.

The House and Senate assembled a tax bill over the weekend that will substantially improve Minnesota’s competitiveness in attracting and retaining technology companies if enacted. Governor Dayton has indicated he does not support the bill because it will cause a larger deficit in the next biennium. MHTA has been working closely with House and Senate leaders as well as the Administration to retain the provisions that strengthen tech companies.

Data Centers

The existing sales tax exemption for qualified data centers is modified allowing for a $30 million investment over 3 years. In addition, the bill reduces the size of the required “refurbished” facility from 30,000 square feet to 25,000 square feet, and clarifies that “substantially refurbished” includes installation of new computer equipment, software, and environmental control, energy efficiency, and building improvements. These changes will enable many more data center projects to utilize the incentive.

Angel Investment Tax Credit

The bill also includes several changes to the angel investment tax credit as well as increases the funding to $16.5 million in tax year 2012 and to $17 million in tax years 2013 and 2014. The bill:

  • increases the credit rate for investments in greater Minnesota businesses to 40 percent if less than 30 percent of credits in the previous year are awarded in greater Minnesota;
  • increases the number of years in which a business may have been in operation from 10 to 20 for businesses engaged in developing drugs that require FDA approval;
  • prohibits investments from qualifying for the credit if the business made a public stock offering before receiving the investment;
  • prohibits businesses receiving creditable investment from making a public stock offering or selling the business within six months after the investment was made; and
  • allows contact information on the businesses receiving the credit to be disclosed to the public.

Upfront Sales Tax Exemption on Capital Equipment

For several years, MHTA has supported an upfront sales tax exemption on capital equipment in place of the existing refund. The bill provides an upfront exemption on capital equipment for small businesses beginning June 30. Beginning in fiscal year 2016, all businesses qualify for an upfront exemption.

R&D Tax Credit

Finally, the tax bill includes an increase in the R&D tax credit second tier from 2.5 percent to 3.1 percent. This is a step in the right direction toward MHTA’s goal of 10 percent tax credit.

A bonding bill has not yet been released, but MHTA continues to advocate for STEM and research facility projects to be included if a bill is assembled. In addition, funding for the Minnesota Science and Technology Authority has not yet found a home. MHTA continues to work on these and other items to strengthen Minnesota’s technology-based economy.

Tax Conference Committee spreadsheet

Tax Conference Committee summary

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