Do you qualify to be a D.C. Qualified High Tech Company?

If you’re a company that delivers technology products and services in the District, you may qualify as a D.C. QHTC, or, Qualified High Technology Company – one of the most appealing incentive packages for high-technology businesses in the country.

As of January 1, 2019, the District of Columbia’s Office of Tax and Revenue (OTR) began implementing new certification requirements for businesses aiming to be treated as a Qualified High Technology Company. This newly introduced process will be administered entirely online on OTR’s MyTaxDc.gov platform.

Due to these changes, both taxpayers seeking QHTC incentives for the first time and those certified in previous years will need to review the new requirement(s) and ensure that certification is obtained PRIOR to filing any District tax return where QHTC benefits are being claimed during the calendar year 2019.

Any tax return filed on or after January 1, 2019 must include a QHTC Certification of Benefits, which will be issued electronically upon completing the new online certification.

According to the Office of the Deputy Mayor for Planning and Economic Development (DMPED), a Qualified High Technology Company is a for-profit company that:

• Is an individual or entity organized for-profit.

• Maintains an office, headquarters, or base of operations in D.C.

• Derives at least 51% of its gross revenues earned in D.C. from one or more permitted high technology activities such as software and data development. Other permitted activities include internet-related services and sales, internet-related training, consulting, advertising, or promoting services, information and communication technologies, equipment and systems that involve advanced computer software and hardware, data processing, visualization technologies, or human interface technologies being used on the Internet or other electronic/digital media, advanced materials and processing technologies, and engineering, production, biotechnology and defense technologies.

• Has 2 or more qualified employees, employed for at least 35 hours per week in any of the permitted activities, in D.C.

• Is appropriately registered with the D.C. government as a business in D.C.

• Is current in all D.C. tax filing requirements and paying obligations.

• Is not located in the D.C. Ballpark Tax Increment Financing (TIF) Area. To learn more: https://incentives.dc.gov/

The QHTC offers benefits for every stage of business including lowered costs to hire, train, and relocate workers, as well as reduced corporate franchise and capital gains rates.

The QHTC offers a 0% corporate franchise tax for your first 5 years of business in D.C. – a rate that will only increase to 6% thereafter, a capital gains tax of only 3% for qualifying investments in QHTC, up to $15,000 annually (for 24 months) in new hire wage tax credit for each qualified disadvantaged employees, up to $5,000 annually (for 24 months) for all other qualified employees,  and up to $20,000 in new hire retaining tax credit for each qualified disadvantage employee, and a 10-year tax exemption from the date of acquisition on personal property used for operating your business.

Other restrictions may apply; for more details contact your personal accountant. For more information on how to become a DC Qualified High Tech Company or to schedule a free consultation, please contact us at on Wendroff & Associates, CPA or by calling 703-553-1099.