Kansas APEX Bill Provides Tax Incentives
The Kansas legislature has passed the Attracting Powerful Economic Expansion Act (APEX) which takes effect July 1, 2022. APEX provides for a variety of tax incentives to qualified firms that agree to invest at least $1 billion in Kansas within a 5-year period, along with up to five of their qualified suppliers.
The legislation has three main goals:
- Attract new businesses to the state, especially those in specific industries
- Establish new national headquarters in Kansas
- Encourage the development of Kansas-based supply chains
Upon successful completion of an annual certification by the Kansas Secretary of Commerce, qualified firms and qualified suppliers will be eligible for the tax incentives outlined below. The percentage/amount of incentives provided are determined on a case-by-case basis by the Secretary of Commerce and are dependent on several factors including the extent and quality of potential new jobs, salary levels, the total amount of investment, and the potential for development of the industry within the state.
Both qualified firms and qualified suppliers are eligible for these incentives:
- Investment tax credits against income tax, premium tax, privilege fees, or privilege tax.
- Reimbursements for up to 50% of eligible employee training and education expenses.
- Sales tax exemptions for all tangible personal property or services purchased by the qualified firm or supplier for the purpose of constructing, reconstructing, enlarging, or remodeling a qualified business facility.
Qualified firms are eligible for these incentives:
- A partial reimbursement of total payroll costs paid to employees of a qualified business facility. The reimbursement is capped at up to 7.5% for up to 10 successive years.
- Annual reimbursement of up to 50% of relocation incentives and expenses provided to incentivize non-resident employees to relocate their primary residence to Kansas and become Kansas residents. Reimbursements are up to $1 million per year per qualified firm for up to 10 successive years.
- A .5% corporate income tax reduction.
Qualified suppliers are eligible for these incentives:
- Retention of up to 65% of their Kansas payroll withholding taxes for up to 10 successive years.
Definitions
A qualified firm is a for-profit business subject to state income, sales, or property tax that is engaged in one or more of the following industries as determined by the Kansas Secretary of Commerce:
- Advanced manufacturing
- Aerospace
- Distribution, logistics, and transportation
- Food and agriculture
- Professional and technical services
In addition, for-profit businesses in any industry can be considered as a qualified firm if they agree to relocate or establish their national corporate headquarters within Kansas. However, certain industries are excluded from this additional definition, including mining, swine production, ranching or gaming.
A qualified supplier provides components, sub-assemblies, chemicals, or other process-related tangible goods. The business must be located in Kansas and owned by an individual, partnership, association, LLC, or corporation domiciled in Kansas or any business that operates in Kansas for the purpose of supplying a qualified firm.
A qualified business facility is a building or complex of buildings used by a qualified firm in the operation of a revenue-producing enterprise. If the facility was acquired or leased from another person or persons, the facility must not have been used as the same or similar enterprise as the qualified firm.
Application Process
Qualified firms and suppliers must submit an application each year with the Secretary of Commerce in order to receive reimbursement. Qualified firms and suppliers are not eligible to participate in other Kansas economic development incentive programs such as PEAK, HPIP, KIT, or KIR. Firms and suppliers are also subject to audits conducted by the Secretary of Revenue and are required to provide financial information as requested by the state.
More Information to Come . . .
Since this is new legislation, there’s a lot yet to be sorted out before this takes effect July 1. You can learn more about the bill here: kansascommerce.gov/apex2022
If you have questions, please contact us for more information.
