Relocating to Anchorage: Businesses

• Foreign Trade Zones – There are five foreign trade zones in Alaska, including one at the Anchorage Port. These secured areas at official ports of entry are considered outside the United States for Customs purposes to reduce red tape and overhead for importers and exporters expediting foreign commerce. At the present time, Anchorage’s FTZ is comprised of seven sites totaling some 1,000 acres located at the Port of Anchorage, Anchorage International Airport and at five private sites throughout the Municipality. For more information on Anchorage’s FTZ, CLICK HERE.

• Stevens Amendment to US Cabotage Laws – In 2003, Senator Ted Stevens offered an amendment to the Aviation Investment and Revitalization Act to provide an exception to the limitation on cargo transfer between foreign carriers in the United States. This allows foreign carriers to transport cargo to the Anchorage airport and consolidate or distribute that cargo to other foreign flagged planes for transport to the rest of the U.S. This is a powerful tool for businesses involved in international shipping or manufacturing. For more information on the Stevens amendment to the US Cabotage restrictions, CLICK HERE.

The State of Alaska does not have a sales, inventory, gross receipts or personal income tax. The state does collect a Corporate Income Tax, which is graduated from 0 percent of taxable income for income below $25,000 up to 9.4 percent of net income for income above $222,000. This tax only applies to the net taxable income allocated and apportioned to the state. For more information on Alaska’s corporate income tax, CLICK HERE.

The Municipality of Anchorage collects property and inventory taxes. The property taxes are based on real personal property and are levied on full assessed value at mil rates ranging from 9-18 mils. The inventory tax is based on 100 percent of inventory value and the mill rate is the same as the real estate rate. Inventory held for shipment outside of Alaska may be exempt from this tax. For more information on the Municipality of Anchorage’s taxes, CLICK HERE.

• Mining/Exploration Credits – The Alaska Exploration Incentives Act allows a deduction of up to $20 million of qualified costs including personnel, transportation, fuel, camp, communications, geochemical, geophysical and contractual expenses for new mines. The enabling legislation allows for 100% credit for eligible exploration costs against future mining license tax, corporate tax and royalties on production. Credits are limited to no more than 50% of the taxes or royalties due to the state in any given year and must be claimed within 15 years of beginning production.

• Petroleum- In 2012, Alaska Senate Bill 23 established tax credits for oil and gas exploration in promising areas of Alaska’s Interior and Northwest Arctic regions. Additionally, the bill adds tax credits and incentives to encourage increased construction of Liquid Natural Gas (LNG) storage facilities, both for in-state consumption and export purposes.

• Economic Development Incentive – Otherwise known as the New Business Incentive Program, this is an economic development grant program targeted at companies locating or expanding into new manufacturing or value-added businesses in Alaska. The program is focused on attracting substantial businesses that will create high-value, year round jobs. “New Businesses” refers to industries and operations that are new to Alaska, as opposed to startups.

• Corporate Tax Exemption for High Growth Industries- As part of Alaska Senate Bill 23, the small business tax exemption relieves certain startups from Alaska’s corporate income tax. The tax exemption applies to small businesses registered as C-Corporations. Most new businesses in Alaska register as LLCs, Partnerships, Sub-S Corporations or Sole Proprietorships; entities largely exempt from corporate income tax. The small corporation tax exemption targets high-growth businesses that need to remain C-Corporations to attract a large amount of shareholder investment. In 2013, 129 Alaska small businesses received this exemption.

• Qualified Inventory – Qualified inventory shall be exempt from taxation. Deteriorated property shall be partially or totally exempt from taxation for up to 10 years. An exemption may be transferred in whole to another entity or owner after substantial completion or beneficial occupancy.

• Property Tax Abatement – Anchorage Municipal code provides for tax exemptions pertaining to property and inventory for economic development. New or expanding businesses meeting certain criteria may be granted property tax abatement. Under Anchorage municipal code 12.35, properties in revitalization areas may qualify for property tax relief. In July 2014, the Fairview/East Downtown Revitalization Area was established. Properties in this district may receive tax abatement for qualifying expenses related to property redevelopment.

• Work Opportunity Credit – this is a federal tax credit program that encourages employers to hire new employees from targeted groups. An employer can claim 40 percent of up to $6,000 of an employee’s first years wages for a maximum credit of $2,400. More information.

• Education Credit – If a corporation pays one of the eligible state taxes, there is a non-transferable credit available for contributions to vocational education programs, accredited Alaska universities or colleges for educational purposes or facilities, Alaska Native educational programs and facilities that qualify under the Coastal American Partnership. The education credit consists of 50% of the first $100,000, 100% of the next $200,000, and 50% of contributions beyond $300,000. The credit cannot exceed $5,000,000 annually across all eligible tax types, and is effective until December 31, 2020, at which point the maximum credit for any taxpayer is $150,000 per year.

• Fire Protection Exemption – Up to 2% of building value may be exempt if the structure contains an approved fire protection (extinguishing) system.  Application deadline; March 15 of the applicable year, more information.

Anyone engaging in business activity in Alaska must have a state business license for that activity. If that activity involves the sale of tobacco, a tobacco endorsement is necessary as well. Business licenses are currentfor two years and cost $50.

In addition to the state business license, professional or occupational licenses are necessary for some activities including health care, law and construction among others. The Municipality of Anchorage also requires certain businesses to apply for licenses through the Municipal Clerk’s office in addition to the State licenses. You can find a list of these businesses HERE.