Cost of Operation
Tax Structure
South Carolina's tax incentives include:
PROPERTY TAX
In South Carolina, only local governments may levy property taxes. A company’s property tax liability is a function of: Property Value (less depreciation) x Assessment Ratio x Millage.
To determine Fair Market Value, real property is appraised, while tangible personal property is recorded at cost and then depreciated based on a statutory depreciation rate (for manufacturers) and income tax depreciation (for other businesses). The fair market value is then assessed at rates established in the South Carolina Constitution. The local millage rate is applied to the assessed value to determine the property taxes. Millage rates in South Carolina are site specific and set annually by local government. A mill is equal to $0.001.
Property Tax Exemptions include inventories (raw materials, work-in-progress, finished goods), intangibles (stocks, dividends, interest) and pollution control equipment. A partial property tax exemption, called an abatement, is available to manufacturing, research and development, corporate headquarters, office and distribution facilities meeting certain requirements.
Companies may also be able to negotiate a Fee-in-Lieu (FILOT) of property taxes, which can greatly reduce their property tax liability. This property tax incentive is offered at the discretion of local governments. Companies investing as little as $2.5 million dollars may negotiate this exemption with the county in which they locate. This 20-year incentive creates significant savings for companies by lowering the assessment ratio from 10.5% for manufacturers to as low as 6%. Furthermore, the millage may be held lower than if the property were not under a FILOT.
CORPORATE TAX
At 5%, South Carolina’s Corporate Income Tax Rate is among the lowest in the Southeast. The state is currently phasing in a single factor sales formula for apportioning income that will be fully implemented by 2011.
Many companies qualify for a Job Tax Credit, which eliminates up to 50% of a company's corporate income tax liability.
The Corporate License Tax Rate is $1 for each $1,000 of capital stock and paid-in or capital surplus, plus a $15 annual fee.
SALES TAX
South Carolina’s sales and use tax rate is 6%. Counties, by approval of a majority of county voters, may assess an additional 1-2% local option sales tax. Proceeds go towards infrastructure improvements or a rollback of property taxes. A variety of sales tax exemptions for companies is offered.
For additional information regarding the South Carolina taxes, contact the South Carolina Department of Revenue.