Port Volume Increase Tax Credit
Virginia’s Port Volume Increase Tax Credit benefits manufacturing, distribution, agriculture, and mineral and gas companies that utilize Virginia’s port facilities. A company that increases its usage by 5% in a single calendar year over its base year of port cargo volume can claim a credit against its corporate income tax of up to $250,000.
To be eligible for Port Volume Increase Tax Credits, a company must:
- Be an agricultural entity, manufacturing-related entity, or mineral and gas entity.
- Use port facilities in Virginia.
- Increase its port cargo volume at these facilities by a minimum of 5% in a single calendar year over its base-year port cargo volume.
- Own the cargo at the time that port facilities are used.
For purposes of this tax credit, an “agricultural entity” is defined as a person engaged in growing or producing wheat, grains, fruits, nuts, or crops; tobacco, nursery, or floral products; forestry products, excluding raw wood fiber or wood fiber processed or manufactured for use as a fuel for the generation of electricity; or seafood, meat, dairy, or poultry products. A “manufacturing-related entity” is defined as a person engaged in the manufacturing of goods or the distribution of manufactured goods. A “mineral and gas entity” is defined as a person engaged in severing minerals or gases from the earth.
A taxpayer may only claim Port Volume Increase Tax Credits for cargo actually owned by the taxpayer at the time the port facilities were used (including upon shipment or on delivery) and for which the taxpayer controlled the method of transportation. Ownership is determined by the terms of the shipping contract and is evidenced by the bill of lading. When cargo originates in Virginia, there is a presumption that the company exporting the cargo out of Virginia controls the method of transportation. When a shipment terminates in Virginia, there is a presumption that the company receiving the import in Virginia controls the method of transportation.
Port cargo volume is defined as the total amount of net tons of non-containerized cargo or containers measured in TEUs of cargo transported by way of a waterborne ship or vehicle through a port facility. Base-year port cargo volume means the total amount of net tons of non-containerized cargo, TEUs of cargo, or units of roll-off cargo actually transported by way of a waterborne ship or vehicle through a port facility during the period from January 1 through December 31. Base-year port cargo volume must be recalculated each calendar year after the initial base year.
To be eligible for this tax credit, the taxpayer’s base-year port cargo volume must be a minimum of either 75 net (short) tons of non-containerized cargo, 10 loaded TEUs, or 10 units of roll-on/roll-off cargo. Each taxpayer must meet one of these thresholds.
For purposes of meeting the base-year port cargo volume requirement, non-containerized cargo and TEUs cannot be aggregated and no tonnage conversion formula shall apply. For taxpayers who do not ship that amount during the calendar year, as applicable, including any taxpayer that locates in Virginia after such period, the taxpayer’s base-year port cargo volume will be measured by the initial calendar year in which it meets the requirement of either 75 net tons of non-containerized cargo, 10 loaded TEUs, or 10 units of roll-on/roll-off cargo.
- Taxpayers submit Form PVI to the Virginia Port Authority by March 1 of the year after the calendar year in which the increase in port cargo volume occurs. Each taxpayer must attach a schedule to Form PVI that contains the following information:
- A description of how the base-year port cargo volume and the increase in port cargo volume were determined.
- The amount of the increase in port cargo volume for the taxable year stated both as a percentage increase and as a total increase in net tons of non-containerized cargo, TEUs of cargo, and units of roll-on/roll-off cargo.
- Taxpayers verify containers or cargo that moved through a Virginia Port Authority-operated marine facility on the Virginia Port Authority’s website.
- A tax year verification summary sheet must be attached to Form PVI. If containers or cargo were moved through another facility in Virginia, the taxpayer must provide additional schedules with information regarding base year and current year cargo volume. Taxpayers must also provide any other information requested by the Virginia Port Authority or the Department.
- If, on March 15 of the year after the calendar year in which the increase in port cargo volume occurs, the cumulative amount of tax credits requested by qualifying taxpayers for the prior year exceeds $3.2 million, then tax credits are prorated among the qualifying taxpayers who requested the tax credit.
- The Virginia Port Authority reviews all applications for completeness and notifies taxpayers of any errors by April 5 of the calendar year in which the tax credit application was submitted.
- If any additional information is needed, it must be provided no later than May 5 of that year to be considered for the tax credit.
- All eligible taxpayers are notified of the amount of allocated tax credits by May 30.
- To claim the tax credit, a taxpayer must claim the granted amount of tax credits on their income tax return. Any tax credit amount that exceeds the taxpayer’s tax liability for the taxable year may be carried forward for five taxable years.
What information is needed on the application for containers?
For containers, only complete Terminal, Container #, Bill of Lading or Booking #, and Import or Export.
What information is needed on the application for non-containerized freight?
For non-containerized freight, only complete Terminal, Vessel Code, Weight, Bill of Lading or Booking #, and Import or Export.
What information is needed on the application for roll-on/roll-off cargo?
For roll-on/roll-off cargo, only complete Terminal, Bill of Lading or Booking #, Piece Count, and Commodity Description.
What if an acknowledgement letter from the Port of Virginia is not received by April 5?
Call 855.771.3990 toll-free.
Are additional attachments needed for Form PVI?
A base cargo verification summary sheet must be attached to the Form PVI application if a Port of Virginia terminal was used.
Where are applications for the tax credit to be sent?
Submit Form PVI and attachments to:
Virginia Port Authority
ATTN: Port Volume Increase Tax Credit
600 World Trade Center
Norfolk, VA 23510
Or fax to 757.683.8211.
How is the credit amount determined?
The Port Volume Increase Tax Credit is generally equal to $50 for each TEU above the base-year port cargo volume, or $50 for each TEU transported through a port facility during a major facility’s first calendar year. For shipments of 40-foot or 45-foot containers, one loaded container is equivalent to two TEUs. For purposes of calculating the amount of Port Volume Increase Tax Credits for taxpayers that ship non-containerized cargo, one TEU is equivalent to 16 net tons of non-containerized cargo. One net ton is equivalent to one short ton, or 2,200 pounds.
Can partial container loads be counted for the credit?
For purposes of determining port cargo volume, only a full container load qualifies as a TEU. A full container load (FCL) is a standard 20-foot, 40-foot, or 45-foot container that is loaded and discharged under the account of one shipper, and is intended for one consignee. A less than container load (LCL) is cargo insufficient in either weight or volume to qualify for the freight rates that apply to a standard shipping container and is therefore combined with cargo owned by other shippers or with cargo intended for at least one other consignee. An LCL does not qualify as a TEU or as non-containerized cargo for purposes of this tax credit.
What is the maximum amount that could be received from this tax credit?
The maximum amount of Port Volume Increase Tax Credits for all qualifying taxpayers is limited to $3.2 million for each calendar year. Generally, a qualifying taxpayer may not receive more than $250,000 worth of Port Volume Increase Tax Credits for each calendar year. However, if on March 15 of each year, the $3.2 million amount of tax credits has not been fully allocated among all qualifying taxpayers, then those taxpayers who have been allocated tax credits for the prior year shall be allowed a pro rata share of the remaining allocated tax credits, up to $3.2 million total. In this case, a qualifying taxpayer may receive an amount of tax credits that is greater than $250,000.