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2011 SESSION

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HB 2283 Small business investment companies; creates credit against insurance license tax for investments.

Introduced by: Donald W. Merricks | all patrons    ...    notes | add to my profiles

SUMMARY AS INTRODUCED:

Credit against insurance license tax for investments in Virginia small business investment companies.  Creates a credit against the state insurance license tax for certain insurance companies that invest in a Virginia small business investment company (VSBIC).  A VSBIC is a Virginia-based entity that has as its primary business activity the investment of cash in qualified businesses and that is certified by the Director of the Department of Business Assistance as meeting the program's requirements.  An eligible insurance company that makes a qualifying investment in a VSBIC is eligible for a transferable credit against its license tax liability equal to 80 percent of the investment, subject to the program's limits. An investing insurer may claim up to one-sixth of the amount of its credits against its license tax liability in any taxable year beginning January 1, 2013.  The total amount of the designated capital for which license tax credits may be allowed is capped at $100 million for the life of the program.  The total amount of the designated capital for which license tax credits may be allowed for all participating investors in any year may not exceed the amount that would entitle all participating investors in VSBICs to take total credits of one-sixth of the $100 million lifetime capped amount.  If the total license tax credits claimed exceeds a limit, allowable license tax credits shall be allocated on a pro rata basis.  VSBICs are required to make investments in qualified businesses in accordance with a schedule that requires 15 percent of allocated capital to be in strategic investment areas.  To qualify for a VSBIC investment, a business shall have its headquarters and principal place of operations in Virginia, have no more than 100 employees, and be engaged in manufacturing, processing, or assembling products, conducting research and development, or providing certain services.  A VSBIC that makes distributions that are neither qualified distributions nor distributions representing repayments of capital contributions to its equity investors is required to pay a profit share tax, which is deposited in the Building Future Jobs Fund.  The Director is authorized to decertify, or impose an administrative penalty of up to $25,000 on, a VSBIC that violates the program's provision.  The measure states that the insurance license tax credits shall be paid from the portion of the license tax revenues that are deposited into the general fund of the state treasury.


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