Nurturing Biotech Companies in New York

Jul 26, 2023

EARLY-STAGE-STARTUP-TAXES

An Overview of START-UP NY, QETC, and Life Sciences R&D Tax Credit Program

 

New York has long been a global hub for finance, fashion, and food. But the Big Apple is also a budding hotspot for biotech, offering a robust range of programs designed to foster growth and innovation in this sector. For biotech companies looking to establish or grow their operations in the state, there are a few key programs worth considering: START-UP NY, the Qualified Emerging Technology Company (QETC) Program, and the Life Sciences Research and Development (R&D) Tax Credit Program. Let’s delve into what each of these programs offers.

 

START-UP NY: A Decade of Tax-Free Operations

START-UP NY is a unique program aimed at partnering businesses with universities and colleges across the state. The ultimate goal? Creating new jobs and boosting the economy. For eligible companies, this partnership translates into ten years of tax-free operations.

 

To qualify, a business must demonstrate that it will create new net jobs in its first year of operation and should be organized as a sole proprietorship, partnership, corporation, or limited liability company. The business should also partner with a university or college sponsoring the tax-free area where the company seeks to do business.

 

Businesses participating in START-UP NY can enjoy several tax credits, including the Business Tax-Free NY Area Elimination Credit, which eliminates franchise tax and personal income tax calculated by the business when filing its tax return. Other credits and exemptions cover excise tax on telecommunication services, Metropolitan Commuter Transportation District (MCTD) Mobility Tax, sales and use tax, real estate transfer taxes, and personal income tax exemptions for employees hired in a certified net new job.

 

QETC Program: Boosting Emerging Tech Companies

The Qualified Emerging Technology Company (QETC) Program is designed to support businesses that focus on emerging technologies. A company is eligible for this refundable credit if it is a qualified emerging technology company, and the average number of individuals employed full-time by the company in New York State during the tax year is at least 101% of the QETC’s base year employment number.

 

A QETC is defined as a company located in New York State with total annual product sales of $10 million or less. Its primary products or services should be classified as emerging technologies, or it should have R&D activities in New York State, with its ratio of R&D funds to net sales equalling or exceeding the National Science Foundation average ratio for all surveyed companies.

 

The credit equals the average number of full-time employees in New York State for the current tax year, minus the QETC’s base year employment number, multiplied by $1,000. The credit is available for three consecutive years.

You can find more information about the QETC Program here.

 

Life Sciences R&D Tax Credit Program: Fueling Innovation

The Life Sciences Research and Development Tax Credit Program is a refundable credit aimed at supporting new businesses that have been certified by Economic Development as qualified life sciences companies. These companies should have incurred qualified research and development expenses in New York State and received a certificate of tax credit issued by Empire State Development (ESD).

 

The credit is available for tax years beginning on or after January 1, 2018, but before January 1, 2028. It equals 15% of the qualified life sciences company’s R&D expenditures in New York State for a company that employs 10 or more persons, or 20% of the R&D expenditures for a company that employs fewer than 10 persons. The credit can be claimed for up to three consecutive years and is limited to $500,000 per year.

 

By offering these three programs, New York aims to provide a fertile environment for biotech companies to bloom. The START-UP NY program’s decade-long tax benefits, QETC’s assistance for emerging technology companies, and the Life Sciences R&D Tax Credit Program’s support for innovative research and development activities all play pivotal roles in fostering the growth of biotech firms. With these resources at their disposal, biotech companies in New York have a unique opportunity to thrive and contribute to the state’s dynamic innovation ecosystem.

If you are one of these companies ready to take advantage of these remarkable opportunities, don’t hesitate to contact us today. Our team of experts is committed to supporting the growth and success of biotech firms in the state and looks forward to helping you reach new heights.