Keystone Opportunity Expansion Zone (KOEZ)

Keystone Opportunity Expansion Zone - Tax Free

Realizing the important role tax incentives play when competing for job creation projects, Pennsylvania, in partnership with the local taxing bodies and economic development agencies, created an innovative tax abatement program; the Keystone Opportunity Expansion Zone (KOEZ).

The KOEZ Program represents one of the boldest economic development incentives because it empowers local communities and has fostered unique state/local and public/private partnerships to authorize the abatement of most state and local taxes for up to ten years.

The Sterling Business & Technology Park is a 252-acre property consisting of 23 lots ranging in size from 3 to 30 acres.  Each property has an approved building footprint ranging in sizes from 10,000 to 270,000 square feet.  Lots may be combined to offer larger building footprints.  Multi story buildings are also an option with Sterling Township authorization.  All 23 parcels are KOEZ eligible.

Press Release: http://sterlingbusinesspark.com/pdf/Sterling_Business_&_Technology_Park_National_Press_Release.pdf

Taxes Eliminated

Binding ordinances and resolutions were passed granting the waiver, abatement or exemption of certain state and local taxes. Your company’s tax burden may be reduced to zero through a number of exemptions, deductions, abatements and credits for the following taxes:

State Taxes

  • Corporate Net Income Taxes
  • Capital Stock & Foreign Franchise Tax – anticipated to be eliminated completely by 2016
  • Personal Income Tax
  • Sales & Use Tax
  • Bank Shares and Trust Company Shares Tax
  • Mutual Thrift Institutions Tax
  • Insurance Premiums Tax

Local Taxes          

  • Local Real Property Tax
  • Sales & Use Tax
  • Earned Income/Net Profits Tax
  • Business Gross Receipts, Business Occupancy, Business Privilege, and Mercantile Tax

Length of tax relief KOEZ status extends through December 31, 2023.

Eligibility

A business relocating from outside Pennsylvania into a KOEZ is not subject to any relocation provisions. Such a business must simply own or lease real property in a KOEZ from which it actively conducts a trade, profession or business and obtain annual certification from the Pennsylvania Department of Community and Economic Development.  To be eligible, you must have a project that dramatically impacts the local economy and/or its workforce.

Existing PA Business Relocating to a Keystone Opportunity Expansion Zone

Any business that moves from a non-KOZ Pennsylvania location into a KOEZ is not eligible to receive the exemptions, deductions, abatements, or credits set forth in the Act unless the business meets at least one of the following:

a. Increases full-time employment by at least 20% in the first full year of operation within the Subzone or;

b. Makes a capital investment in the property located within the Subzone at least equivalent to 10% of the gross revenues of that business in the immediately proceeding calendar or fiscal year attributable to the business location or locations that are being relocated to a subzone.

c. Enters into a lease agreement for property located within the Subzone for a term at least equivalent to the duration of the Subzone and with the aggregate payment under the lease agreement at least equivalent to 5% of the gross revenues of that business in the immediately preceding calendar or fiscal year.

The Department, in consultation with the Department of Revenue, may waive or modify the requirements of this subsection, as appropriate. Relocating businesses must request a modification to the requirements of this subsection within 30 days of receiving their Initial Relocation Notification letter.

Any questions concerning relocation provisions should be directed to the KOZ Manager at the Department of Community and Economic Development. 

Eligibility for benefits is based upon annual certification. In order to receive benefits, any entity applying must be compliant with all local and state taxes and building and zoning codes.

To view the KOEZ guidelines and application, click here.

 

Estimated Tax Savings Example for a KOEZ property in Sterling Township, Wayne County:

PA Corporate Net Income Tax Example

Nationwide Net Income:

$2,000,000

         Percentage of U.S. Business in PA

60.00%

Estimated PA Taxable Income

$1,200,000

PA Corporate Income Tax Rate

9.9%

Estimated Annual Corporate Net Income Tax

$119,880

  

PA Sales and Use Tax Example

Start-up Taxable Investment in KOZ

$2,500,000

Annual Taxable Purchases in KOZ

$500,000

Percentage of PA Business in KOZ

100%

Sales Tax Rate (State)

6.00%

Estimated Taxable Purchases/Investment

$3,000,000

Estimated Sales and Use Tax on Purchases

$180,000

  

Property Tax Example 

Real Property

 $2,500,000

Assessed Value

$2,500,000

Millage Rate

19,5599

Estimated Real Property Tax

$48899.75

Percentage of KOZ Tax Abatement

100%

Estimated KOZ Abatement on Real Property Taxes

$48,899.75

  

Estimated KOZ savings Year 1

$348,779.75

Business Park Location

Sterling Business & Technology Park is situated midway along the Boston - Washington D.C. corridor.  Access to all areas is easily obtained without having to fight traffic congestion that prevails inside metro areas. Highway access is superb, with Exit 17 on Interstate 84 less than one mile south and the confluence of I-84, I-380 and I-81 fifteen minutes to the west.  Located in Sterling Township, Wayne County, Pennsylvania.  GPS Coordinates: 41.36,-75.39  For more information:

 

CALL 646-236-3400