§ 47:3204 — Contracts of exemption; renegotiation; violations; lists; priority of exemptions

Louisiana § 47:3204

• Jurisdiction: Louisiana
• Title 47: Revenue and Taxation

Text

§3204. Contracts of exemption; renegotiation; violations; lists; priority of exemptions
A. The Board of Commerce and Industry may, after the requirements of R.S.
47:3203 have been satisfied, enter into contracts with manufacturing establishments,
headquarters, or warehousing and distribution establishments under which contracts such
establishments are granted exemption from taxes imposed by this state as provided in this
Section, upon the terms and conditions specified in this Chapter and subject to such other
terms and conditions as the board on the recommendation of Louisiana Economic
Development deems to be in the best interests of the state.
B.(1)(a) Except as otherwise provided in this Subsection, each contract of exemption
entered into under authority of this Chapter shall be reviewed and reevaluated, and shall be
subject to renegotiation, five years from the date of the execution of the contract and may be
renewed for an additional five-year period.
(b)(i) Subsequent renewals for additional periods of five years or less may be granted
to a contract holder whose contract has not expired as of the date of application for renewal
if the applicant can demonstrate the conditions of the initial contract were met and the
activities of the applicant in the state of Louisiana generate economic benefits to the state that
exceed twenty times the benefit to the applicant of the incentive provided by this Chapter for
the year preceding the request for renewal. Such benefit to the state shall be determined by
the application of nationally recognized multipliers as appropriate and set forth in the
Regional Input-Output Modeling System ("RIMS II"), or its successor publications, for the
business operations of the applicant as published by Regional Economic Analysis Division
BE-61, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, D.C.
20230.
(ii) The contract holder's application for subsequent renewal shall include an
attestation by an independent public accounting firm of the calculation of the economic
benefit to the state.
(iii) In addition to the requirements of R.S. 47:3203, the Board of Commerce and
Industry shall forward its recommendations, together with the proposed contract and all
supporting documents, to Louisiana Economic Development and the Joint Legislative
Committee on the Budget. Upon receipt of the recommendations and proposed contract, the
Joint Legislative Committee on the budget shall have thirty days to approve or reject the
renewal contract.
(c) At the invitation of the governor, contracts of exemption for which the initial
five-year renewal period ended on or after December 1, 2002, but before February 2003 may
be further renewed for up to two additional five-year periods provided that the total number
of years of exemption shall not exceed twenty years. The first of the additional two renewals
authorized by this Subparagraph shall commence with the first taxable period following
August 15, 2005 and need not be contiguous with the preceding renewal period.
(2) For purposes of this Paragraph, "headquarters" shall be defined as it is defined
in other definitions contained in law. In addition, it shall be a requirement to enter the new
contract provided in this Paragraph that:
(a) After the move of such headquarters, ninety percent of the establishment's
employees shall reside in Louisiana.
(b) Ninety percent of the company's officers and managers shall have their primary
office in Louisiana.
C. Louisiana Economic Development shall review and reevaluate exemption
contracts and make recommendations to the governor and Board of Commerce and Industry
in respect to renegotiation thereof if necessary.
D. Noncompliance with any of the terms and conditions of the contract under which
exemptions are granted is grounds for termination of the contract. If the Board of Commerce
and Industry determines that noncompliance with the terms and conditions of the contract
under which exemptions are granted has occurred, it shall notify the business entity of the
determination. If the violation is not corrected within ninety days, the Board of Commerce
and Industry shall hold a hearing to determine whether the contract of exemption should be
terminated.
E.(1) All exemptions from taxation granted under contracts entered into under
authority of this Chapter shall be listed by the board, and a copy of each such listing shall be
submitted to the agencies of the state which collect the taxes from which such exemptions
have been granted. Each such collecting agency shall make and maintain a list of all such
exemptions in effect. Whenever any exemption, or any part thereof, ceases by reason of a
violation of the terms of the contract under which it was granted, or for any other cause, the
board shall notify the collecting agencies.
(2) If the collecting agencies receive notice that the exemption, or any part thereof,
has ceased by reason of a violation of the terms of the contract under which it was granted
after the establishment has already received the exemption, then the amount exempted for
the year in which the violation occurred, and for each year thereafter in which the violation
is not remedied, shall be considered a tax due as of December thirty-first of the year in which
the violation occurred, and for each year thereafter in which an exemption is used and the
violation is not remedied and it shall be collected by the collecting agencies in the same
manner and subject to the same provisions for the collection of other tax debts.
F. When entering into a contract, the Board of Commerce and Industry shall grant
to a manufacturing establishment, headquarters, or warehousing and distribution
establishment only such amount of tax exemption or exemptions as is necessary to effect
equality in amount between the taxes payable in Louisiana and the taxes which are or would
be payable in the state in which such establishment is located or is contemplating locating
as determined in this Section.
G. The contract of tax equalization shall, on an annual basis, effect equality in
amounts between the taxes payable in Louisiana and the taxes which would have been
payable in the competing state. Louisiana Economic Development may make and
promulgate such rules and regulations necessary to determine the annual equalization
amount.
H. Unless the Department of Revenue for valid written reasons recommends
otherwise, exemptions for a new or retained manufacturing establishment shall be granted
from state taxes only in the following priority:
(1) Repealed by Acts 2024, 3rd Ex. Sess., No. 6, §3, eff. Jan. 1, 2026.
(2) The corporation income tax.
(3) Sales and use tax on machinery and equipment to be used in manufacturing.
(4) The sales and use taxes imposed by the state upon materials and supplies
necessary for the manufacture or production of the product of the new manufacturing
establishment.
(5) Any other taxes imposed by the state to which like businesses are subject.
I.(1) Unless the Department of Revenue for valid written reasons recommends
otherwise, exemptions from taxation for a business locating or retaining headquarters in this
state shall be granted from state taxes only in the following priority:
(a) Repealed by Acts 2024, 3rd Ex. Sess., No. 6, §3, eff. Jan. 1, 2026.
(b) The corporation income tax.
(c) Sales and use tax on purchases and leases of, and repairs to, machinery and
equipment which is used in the on-site operation of the new headquarters facility.
(d) The sales and use tax on purchases of tangible personal property used in the
construction of the new headquarters facility.
(e) Any other taxes imposed by the state to which such businesses are subject.
(2) Rules and regulations concerning new headquarters contracts shall be submitted
for review to the House Committee on Ways and Means and the Senate Committee on
Revenue and Fiscal Affairs in addition to all other legislative oversight which may be
required.
J. Unless the Department of Revenue for valid written reasons recommends
otherwise, exemptions for a new or retained warehousing and distribution establishment shall
be granted from state taxes only in the following priority:
(1) Repealed by Acts 2024, 3rd Ex. Sess., No. 6, §3, eff. Jan. 1, 2026.
(2) The corporation income tax.
(3) Sales and use tax on purchases and leases of, and repairs to, machinery and
equipment which is used in the on-site operation of the warehousing and distribution
establishment.
(4) The sales and use tax on purchases of materials and supplies necessary for the
on-site operation of the warehousing and distribution establishment.
(5) The sales and use tax on purchases of tangible personal property used in the
construction of the warehousing and distribution establishment.
(6) Any other taxes imposed by the state to which like businesses are subject.
K. In no event shall any exemption from ad valorem property taxes be granted under
any contract entered into under authority of this Chapter. This exemption applies only to
sales and use tax imposed by the state of Louisiana and does not apply to such taxes
authorized and levied by any school board, municipality, or other local taxing authority
notwithstanding any other provision of law to the contrary, specifically but not exclusively
R.S. 47:337.8.
L.(1) Notwithstanding the provisions of any law suspending a sales tax exemption
or exclusion, or making it inapplicable, inoperable, and of no effect, or the provisions of any
other law to the contrary, the sales and use taxes imposed by the state of Louisiana shall not
apply to purchases or leases of airplane equipment, airplane parts, and airplanes by any
commuter airline domiciled in the state.
(2) A commuter airline for the purposes of this Subsection is defined as any airline
transporting passengers and/or freight on a regularly scheduled basis, with a minimum of
twenty flights per week, whose schedule is published in the Official Airline Guide but which
has been exempted from the general rate and route regulations of the Civil Aeronautics Board
under the provisions of Section 298.11 of Subpart B of Part 298 of Chapter II of Title 14 of
the Code of Federal Regulations promulgated under the authority of Sections 1324 and 1386
of Title 49 of the United States Code. A commuter airline is further defined as any airline
having ticket counters that are staffed at airports it serves, a reservations office operating at
least twelve hours a day, seven days a week, and interline ticket and baggage agreements
through the Air Traffic Conference of America.
M. No contracts shall be entered into and no existing contracts may be renewed
pursuant to the provisions of this Section after June 30, 2025.
NOTE: See Acts 2024, 3 rd Ex. Sess., No. 5, §4, regarding applicability to franchise
tax periods beginning on or after Jan. 1, 2026.

Legislative History

Acts 1966, Ex.Sess., No. 12, §4; Acts 1976, No. 381, §1; Acts 1985, No. 3, §1, eff. May 31, 1985; Acts 1987, No. 307, §1; Acts 1987, No. 356, §1; Acts 1987, No. 535, §1; Acts 1987, No. 921, §1; Acts 1989, No. 491, §1; Acts 1990, No. 783, §1, eff. July 24, 1990; Acts 1993, No. 400, §1, eff. July 1, 1993; Acts 1998, No. 60, §1; Acts 1998, No. 72, §1, eff. July 2, 1998; Acts 2002, No. 36, §1, eff. June 25, 2002; Acts 2005, No. 403, §1; Acts 2007, No. 389, §1, eff. July 10, 2007; Acts 2024, 3rd Ex. Sess., No. 5, §1, eff. Jan. 1, 2025; Acts 2024, 3rd Ex. Sess., No. 6, §3, eff. Jan. 1, 2026; Acts 2024, 3rd Ex. Sess., No. 11, §2, eff. Dec. 4, 2024.