Alaska tax credits promote financing opportunities.

• Author: Iversen, Jonathan E.
• Position: Legal Speak

We Alaskans are blessed with bountiful natural resources and an iconic landscape. To promote economic growth and create financing opportunities made possible by these resources, the state of Alaska provides businesses with a series of tax incentives. Two of the most widely known incentives are the film production tax credit and the oil and gas production tax credits.

Film Tax Credit

Alaska's majestic landscape and its adventurous people are a strong draw for documentary and commercial moviemakers. The film production tax credit provides an additional economic incentive. The credit has a base rate of 30 percent for eligible expenditures with an additional 20 percent for local hire, an additional 6 percent for filming in rural areas, and an additional 2 percent for off-season filming. The maximum possible credit is 58 percent. Eligible projects are films, documentaries, and commercial and video productions with a minimum of $75,000 in qualified expenditures in Alaska.

To qualify their project for the film tax credit, applicants must submit to the Alaska Film Office an application that includes estimated Alaska expenditures, a budget, a distribution plan, and a description of the project, as well as evidence of an Alaska business license. The Alaska Film Incentive Review Commission must approve the application.

The applicant must have its expenditures reviewed by a CPA that has Alaska CPA and business licenses and is located in Alaska. Once production is complete, the applicant can file the application for tax credit. The Alaska Film Incentive Review Commission must approve the application before the credit certificate is awarded. Once awarded, the applicant may transfer the certificate to an entity that can apply the certificate against its tax liability under eight tax types, including corporate income tax, oil and gas production tax, oil and gas exploration tax, production and pipeline transportation property tax, and mining license tax. The Alaska Department of Revenue (DOR) may purchase the certificate for 75 percent of the amount of credit.

Oil and Gas Tax Credits

Alaska's oil and gas production tax credits are a very hot commodity, with recent program changes having helped incentivize exploration and production companies to invest in the state.

Several types of production tax credits are available. Certificates for these credits can be obtained from DOR and can be transferred to another entity or purchased by the state of Alaska. The...