Many food and beverage companies are overlooking potential tax savings, thinking that their activities do not qualify for these opportunities. Based on our experience working with clients in this industry, GHJ has identified a number of potential strategies you should consider. We have kept the information at a high level to stimulate conversation and to avoid too technical of a discussion in this blog entry:

  1. California Manufacturing Partial Sales Tax Exemption – For purchases or leases of qualified machinery and equipment used in the manufacturing process in California, California allows a partial sales/use tax exemption equal to approximately 45 percent of the sales/use tax that would otherwise be due on the purchase/lease payment. The partial sales/use tax exemption applies to purchases of or leases of qualified machinery and equipment on or after July 1, 2014. Many food and beverage manufacturing companies are benefiting from this partial sales/use tax exemption. For more information please click here.
  2. Research and Development Tax Credits – Food and beverage manufacturers have traditionally made large investments in new products, new manufacturing processes and new forms of packaging to extend the shelf life of products and reduce their environmental footprint. Many of these companies are unaware that their efforts can yield large amounts of research credits. R&D tax credits can provide lucrative tax-savings benefits to corporations as well as individuals that own interests in various pass thru entities. For more information on how the research and development tax credit can apply to food and beverage companies, please click here to see the guest blog article from May 29, 2014.
  3. Multi-State Credits and Incentives – Food and Beverage companies looking to expand outside of California should be aware that many states offer lucrative tax credits and incentives for new and expanding businesses. These credits can range from property tax abatements and sales/use tax exemptions to employment and income tax credits. Additionally, many states and municipalities provide lucrative incentives, including the potential for government funding for the development of new manufacturing facilities. It is imperative that food and beverage companies looking to expand outside of California seek counsel from their tax advisors proactively on the potential tax credits and incentives available in other jurisdictions upon current or future expansion initiatives.