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Alaska Incentives and Workforce Development Guide

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TAX INCENTIVES

State Credits available against the Corporate Income Tax:

Education Credit (AS 43.20.014):
Taxpayers that contribute to vocational education programs or accredited Alaska universities or colleges for educational purposes or facilities may claim a tax credit for 50% of the first $100,000, 100% of the next $200,000, and 50% of further contributions. This credit can also be claimed against the insurance premium tax, the oil and gas production and property taxes, the fisheries business and landing taxes, and the mining license tax. Through December 31, 2020, the maximum credit is $5,000,000 for each tax year across all tax types. For tax years after December 31, 2020, the credit will be capped at $150,000.
Gas Exploration and Development Credit (AS 43.20.043):
Taxpayers may take a corporate income tax credit for 25% of qualifying expenditures incurred in exploration and development of natural gas reserves in Alaska, except for the North Slope. The credit is capped at 75% of tax liability as calculated before applying other credits, and investments in existing units are eligible.
Gas Storage Facility Credit (AS 43.20.046):
A refundable credit for establishing a gas storage facility in the amount of $1.50 per thousand cubic feet of “working gas” storage capacity. The credit is capped at the lesser of $15 million or 25% of costs to establish the facility. Effective for facilities placed into service between January 1, 2011 and December 31, 2015.
Film Production Credit (43.98.030):
This is a transferable credit with a base rate of 30% of eligible Alaska spending plus bonus credit for Alaska payroll, rural spending and off-season spending. Expires the earlier of July 1, 2023 or once $200 million of credits have been approved.
Internal Revenue Code Credits Adopted by Reference (AS 43.20.021):
Under Alaska’s blanket adoption of the IRC, taxpayers can claim all federal incentive credits. Federal credits that refund other federal taxes are not allowed. Multistate taxpayers apportion their total federal incentive credits. For most credits, credit is limited to 18% of the amount of the credit determined for federal income tax purposes which is attributable to Alaska.
LNG Storage Facility Credit (AS 43.20.047):
A refundable credit for establishing an LNG storage facility. The credit is capped at the lesser of $15 million or 50% of costs to establish the facility. Effective for facilities placed into service between January 1, 2011 and December 31, 2019.
Minerals Exploration Incentive Credit (AS 43.20.044):
Taxpayers may claim a credit for 100% of eligible costs of exploration activities related to determining existence, location, extent, or quality of a locatable mineral or coal deposit. An approved exploration incentive credit may not exceed $20 million and must be applied within 15 tax years after the credit is approved. This credit may also be applied against the mining license tax. Application of the credit is limited to the lesser of 50% of the mining license tax liability or 50% of the corporate tax liability.
Oil and Gas Service Industry Manufacturing Credit (AS 43.20.049):
As part of the More Alaska Production Act passed in 2013, this is a credit of 10% of qualified oil and gas industry service expenditures, up to $10 million per taxpayer per year. The credit applies to qualified oil and gas service expenditures that are for in-state manufacture or in-state modification of oil and gas tangible personal property with a service life of three years or more.
Veteran Employment Tax Credit (AS 43.20.048):
A credit for the employment of a veteran. The available credit is $3,000 for hiring a disabled veteran or $2,000 for a veteran who is not disabled.

State Credits available against the Oil and Gas Production Tax:

Alternative Credit for Exploration (AS 43.55.025):
Credit of 30% or 40% of eligible exploration expenditures. Specific criteria include requirements related to location of work, distance from other wells, etc. The credit is applicable to work performed before July 1, 2016 for the North Slope and Cook Inlet; for areas outside the North Slope and Cook inlet the credit is applicable to work performed before January 1, 2022 as part of the More Alaska Production Act passed in 2013.
Carried-Forward Annual Loss Credit (AS 43.55.023(b)):
Taxpayers may receive credit of 25% of a carried-forward annual loss. If applying for a transferable credit certificate, no more than half the credit may be applied in a single calendar year. As part of the More Alaska Production Act passed in 2013, for the North Slope only, this credit will increase to 45% on January 1, 2014, and the credit will change to 35% beginning January 1, 2016.
Cook Inlet Jack-Up Rig Credit (AS 43.55.025(a)(5), (m)):
Credit for exploration expenses for first three pre-tertiary wells drilled by unaffiliated parties using the first jack-up rig brought in to Cook Inlet under this program. Credit is 100% of costs up to $25 million for first well, 90% of costs up to $22.5 million for second well, and 80% of costs up to $20 million for third well.
Education Credit (AS 43.55.019):
Taxpayers that contribute to vocational education programs or accredited Alaska universities or colleges for educational purposes or facilities may claim a tax credit for 50% of the first $100,000, 100% of the next $200,000, and 50% of further contributions. This credit can also be claimed against the insurance premium tax, the oil and gas production and property taxes, the fisheries business and landing taxes, and the mining license tax. Through December 31, 2020, the maximum credit is $5,000,000 for each tax year across all tax types. For tax years after December 31, 2020, the credit will be capped at $150,000.
Exploration Incentive Credit (AS 38.05.180(i)):
Taxpayers may receive credit of up to 50% of the cost of drilling or seismic work performed under a limited time period established by the commissioner. The credit cannot exceed 50% of the tax liability for which it is being applied.
Frontier Basin Credit (AS 43.55.025 (a)(6)-(7)):
A credit for expenses for the first four persons to drill exploration wells and the first four persons to conduct seismic projects within designated “Frontier Basins.” Credit is for lesser of 80% of qualified exploration drilling expenses or $25 million; or for seismic projects, credit is for lesser of 75% of qualified seismic exploration expenditures or $7.5 million. Includes expenditures incurred for work performed after June 1, 2012 and before July 1, 2016.
New Area Development Credit (AS 43.55.024(a)):
Credit of up to $6 million per year for taxpayers incurring eligible oil and gas lease expenditures in areas of the state other than the North Slope and Cook Inlet. Credit is available until the later of 2016 or 9 years after first eligible production.
Qualified Capital Expenditure Credit (AS 43.55.023 (a),(m)):
Taxpayers may receive credit of 20% for qualified capital expenditures and or a credit of 40% for qualified well-related lease expenditures outside the North Slope. For credits earned for North Slope capital expenditures under AS 43.55.023 (a), no more than half the credit may be applied in a single calendar year. As part of the More Alaska Production Act passed in 2013, as of January 1, 2014, this credit will only apply to areas outside the North Slope.
Per Taxable Oil Barrel Credit (AS 43.55.024(i)-(j)):
As part of the More Alaska Production Act passed in 2013, a credit of $5 per taxable oil barrel may be applied against a producer’s production tax liability for oil produced from Gross Value Reduction (GVR) eligible areas. For areas not subject to the GVR, a sliding scale credit ranging from zero to $8 per taxable barrel may be applied against a producer’s production tax liability. The sliding scale credit is a dollar-per-taxable-barrel credit ranging from zero to $8 per barrel depending on a producer’s Gross Value at Point of Production per barrel.
Small Producer Credit (AS 43.55.024(c)):
Credit of up to $12 million per year for taxpayers incurring eligible oil and gas lease expenditures in North Slope operations. Full credit is given to companies producing less than 50,000 barrels of oil equivalent per day. Credit is available until the later of 2016 or nine years after first eligible production.

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