When most people think of state tax credits, they think of them in terms of their benefits for various taxpayers operating in the United States. However, state tax credit programs have received international news coverage lately because of a dispute between India and the United States.

India notified the World Trade Organization (WTO) that several state tax credit programs in the United States have domestic content requirements, which violates global trade rules, reports a Bloomberg BNA Green Incentives Monitor article.

In particular, the solar incentive programs in Delaware, Minnesota, Massachusetts, and Connecticut have most come under fire by India. These state programs are in addition to a previous complaint about tax credits and incentive programs offered in Michigan, California, and Texas, according to the article.

India specifically charges that “some of the incentive programs in question make the availability of incentives contingent upon the use of domestic or state-specific products,” notes the article.

Interestingly, India’s recent complaints to the WTO comes after the United States announced in February that it is starting WTO dispute settlement proceedings regarding India’s solar energy program, reports the article.

This is not the first time state tax incentives have been involved in the WTO dispute settlement process. For example, Washington tax incentives given to Boeing are part of an ongoing WTO dispute settlement proceeding started by the United States over “launch aid” given to certain companies by the European Union, according to this American Society of International Lawarticle.

In short, state tax credits have far reaching effects: they affect commerce in the United States and all over the world!

For more information about the state tax credits available for solar energy, check out Bloomberg BNA’s Green Incentives Navigator.


In other developments . . .

Legislation recently enacted in Utah amends the economic development zone credit by increasing the credit amount and providing for termination of the credit if certain performance benchmarks are not met, a Bloomberg BNA Weekly State Tax Report article reports.

By:  Kathleen Caggiano

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