Shipbuilding Facility Investment Tax Credit Program

On April 4, 2018, PL 361, An Act To Encourage New Major Investments in Shipbuilding Facilities and the Preservation of Jobs became law in Maine. This program is intended to create and retain jobs in the shipbuilding industry, encourage investment in shipbuilding businesses and improve the competitiveness of the State’s shipbuilding industry.    

Application Process:

A qualified applicant must satisfy, at time of application for a certificate of approval, the following criteria:

  • The applicant owns and operators or proposes to operate to construct a Maine shipbuilding facility;
  • The applicant proposes to make a qualified investment in the State;
  • The applicant employs at least 5,000 qualified employees at the time the application is filed; and
  • The applicant does not otherwise qualify for the Pine Tree Development Zone Program or the Maine Employment Tax increment Financing program at the time the application is filed.
  • “Qualified investment” means expenditures incurred on or after January 1, 2018 that total at least $100,000,000 as described in 36 MRSA §5219-RR(1)(I).

Procedures for application; Certificate of Approval:

A qualified applicant may apply to the Commissioner of DECD for a certificate of approval.  An applicant shall submit to the commissioner information demonstrating the applicant is a qualified applicant.  A certified applicant may hold only one certificate under this section at any time.

The Commissioner, within 30 days of receipt of an application, shall review the information contained in the application and issue a written determination as to whether the applicant is a qualified applicant.  If the Commissioner determines that the applicant is a qualified applicant, the Commissioner shall issue a certificate of approval to the qualified applicant at the time of the determination. 

A certified applicant shall obtain approval from the Commission to transfer the certificate of approval, or if the certified applicant has obtained a certificate of completion, that certificate of completion to another person.  A certificate of approval or certificate of completion may be transferred only if the transferee of the Maine shipbuilding facility or of the certified applicant’s stock is a member of the certified applicant’s unitary affiliated group at the time of the transfer or the transferee of the Maine shipbuilding facility or of the certified applicant’s stock is not a member of the certified applicant’s unitary affiliated group at the time of transfer and the Commissioner finds that the transferee intends to continue the operations of the Maine shipbuilding facility in substantially the same manner as prior to the transfer and has the financial capability to do so.

If the Commissioner grants a transfer of the certificate of approval, the transferee must be treated as the certified applicant.  For purposes of calculation of employment and qualifies investments of the certified applicant, the qualified employees and the qualified investments of the transferor prior to transfer must be considered the qualified employees and qualified investments of the transferee.

A certificate of approval must be revoked by the Commissioner if the certified applicant has not made qualified investments of at least $100,000,000 within 5 years after issuance of the certificate of approval.

Program Benefits:

  • Beginning with the tax year after the certified applicant has made qualified investments of at least $100,000,000 or the tax year beginning on or after January 1, 2020, whichever is later, and for each of the following 9 tax years, a certified applicant is allowed a credit against the tax due under this part for each taxable year in an amount equal to 3% of the certified applicant’s total qualified investment.
  • If a certified applicant completes an additional qualified investment of at least $100,00,000 prior to January 1, 2025, the certified applicant is allowed a credit against the tax beginning with the 11th tax year after the after the investment referenced above was made and continuing through the 15th tax year after making that investment.  The amount of the additional credit available in each of those tax years is 3% of the certified applicant’s additional qualified investment.  Eligibility for the additional credit must be demonstrated by the certified applicant in the required annual report submitted to DECD.
  • The annual credit allowed to a certified applicant or its transferee may not exceed $3,000,000 in any tax year. Cumulative credits taken under this section may not exceed $45,000,000 to any certified applicant or transferee.
  • For a tax year in which the qualified applicant has employment of fewer than 5,500 the amount of the credit is reduced.
  • A taxpayer that is certified as a qualified Pine Tree Development Zone business or that has received a certificate of approval for its employment tax increment financing program, is not eligible for a credit under the Major Investments in Shipbuilding Facilities program.
  • In no case may the credit be claimed for a tax year that begins after December 31, 2034.
  • Accelerated Credit.  If a certified applicant has employment in any tax year of at least 6,000 the credit limitation is increased to $3,125,000 for that tax year. If employment is at least 6,500 the credit limitation is increased to $3,250,000.  If employment is at least 7,000 the credit is increased to $3,375,000. If employment is 7,500 or more, the credit is increased to $3,500,00.
  • Reduced Credit. If a certified applicant’s employment is fewer than 5,500 employees during the tax year, the credit allowed is reduced as described in 36 MRSA §5219-RR(6)(A-G).   
  • Additional requirements.  A certified applicant, when awarding contracts, purchasing supplies or subcontracting work related to a qualified investment, shall give preference, to the greatest extent possible, to Maine workers, companies and bidders as long as the supplies, products, services and bids meet the standards required by the certified applicant regarding value, qualify, delivery terms and price.

Reporting Requirements:

On or before March 1st of each year, a certified applicant shall file a report with the Commissioner of DECD for the tax year ending immediately preceding the calendar year.  The certified applicant's report shall contain the following information:

  • Number of full-time employees based in the State of Maine
  • Incremental amount of qualified investment made in the report year

The Commissioner of DECD must provide copies of the report to the State Tax Assessor and the joint standing committee of the Legislature having jurisdiction over tax matters at the time the report is received.

By April 1st of each year, the commissioner shall report to the joint standing committee of the Legislature having jurisdiction over tax matters aggregate data on employment levels and qualified investment amounts of certified applicants for each year.

The State Tax Assessor shall report to the committee the revenue loss during the previous calendar year, including the loss due to refundable credits, as a result of this section for each taxpayer claiming the credit.

The Office of Program Evaluation and Government Accountability (OPEGA) shall submit an evaluation of the credit provided under this section to the joint legislative committee established to oversee program evaluation and government accountability and the joint standing committee of the Legislature having jurisdiction over taxation matters.  The evaluation parameters to perform the review as detailed in 36 MRSA §5219-VV(7).