Albert E. Bergen, CPA

Pine Tree Development Zones

Maine Pine Tree Development Zones were originally select regions of the state where businesses who opened or expanded and added quality jobs were able receive special tax benefits.  The program has since been expanded to apply throughout Maine, although there are still two tiers of Pine Tree Development Zone.  The benefits are available for five years in Tier 1 and for 10 years in Tier 2.

Pine Tree Development Zone Benefits

Pine Tree Development Zone Benefits can reduce or eliminate income taxes on the additional profits a company generates by expanding in Maine.  The benefits of applying for and receiving PTDZ benefits and include a credit against corporate income tax, a credit against insurance premiums for financial services companies, a reimbursement for some of the state income tax resulting from the increase in activity, exemption from sales tax on business equipment purchases, exemption from sales tax on purchases that go into real estate improvements, and access to reduced electricity rates.  These benefits can be quite generous but the calculations involved can get fairly complicated, so they will be discussed in a separate blog post.

Qualifications

To qualify as a Pine Tree Development Zone Business, a company bust be operating in one of the following sectors:

  • Biotechnology
  • Aquaculture and Marine Technology
  • Environmental Technology
  • Advanced Technologies for Forestry and Agriculture
  • Manufacturing and Precision Manufacturing
  • Information Technology
  • Financial Services

Additionally, the company must be creating new “quality jobs” in Maine.  It cannot simply move jobs around within the state to claim PTDZ benefits, but it can relocate jobs from outside of the state to Maine.  To count as a “quality job”, the total compensation for the new employees must, including employer payments toward employee benefits, must be at least as much as the per-capita income for the county in which the job is created and the job must include access to a group health plan and a retirement plan subject to ERISA.

Application Process

A company cannot simply hire a new employee and claim PTDZ benefits.  To claim PTDZ benefits, a company needs to get certified as a PTDZ business by the Maine Department of Economic and Community Development (DECD).   Prior to announcing its plans to expand publicly, the company must write a letter to the DECD stating that they would not be creating the new jobs without the PTDZ benefits.  Once the DECD acknowledges the letter, the company can then complete an application for PTDZ benefits.  There are DECD representatives available to help business who are considering expanding in Maine apply for PTDZ benefits, and any business considering

Resources

Maine Department of Economic and Community Development –  “Governor’s Account Executives”

Maine Department of Economic and Community Development – PTDZ Benefits

Per-Capita Personal Income Table

 

photo credit: InAweofGod’sCreation via photopin cc


Leave a Comment