DON'T IGNORE THE TAX IMPLICATIONS OF IMPLEMENTING NEW TECHNOLOGY.

When implementing new technologies, don't neglect potential tax implications. If not properly planned for, changes can drain your company's cash flow.

This is the first in a series of informative monthly articles for North Carolina businesses from PNC in partnership with BUSINESS NORTH CAROLINA magazine.

Companies are incorporating the newest technologies into their businesses at a rapid pace. Whether Industry 4.0 or other similar standards, new technologies are exciting and can accelerate rapid growth when successfully implemented.

Examples of the expected growth in manufacturing-related technologies from a recent study include: [3]

* Artificial Intelligence is projected to grow at a 55% compound annual growth rate (CAGR) from 2016 to 2021.

* The CAGR for the blockchain market is more than 61 % for the same period.

* Spending on advanced robotics technology is expected to experience a CAGR of almost 20%.

When implementing new technologies, do not neglect dealing with all the potential tax implications. If new technology implementation is not properly planned for, the changes can drain your company's cash flow.

Potential, often unforeseen, tax implications that arise from evolving technology can change how your company does business and how you do business with suppliers and customers.

Technology's ability to break down the barriers of location can have separate tax implications, as well.

UPGRADING EQUIPMENT

Technology-based capital expenditures can help your company grow and stay competitive in today's fast-changing business environment. Even future investments in technology-based manufacturing solutions can have old-fashioned tax implications. [1]

* Tax credits can be a factor when choosing where your company makes investments. Several municipalities, states and countries offer tax-incentives to encourage business investment. If the level of the capital expenditure is substantial, it might be a deciding factor for investing in upgrades for an existing facility in a location that does not offer incentives or investing in a new or existing location that does.

* Technology-based production can change a company's supply chain, which can change transfer pricing models. Depending on the location, taxes can vary at different stages of the manufacturing process.

The Tax Cuts and Jobs Act of 2017 included incentives for companies to purchase, upgrade and invest in new equipment. [4]

Incentives from the Tax Cuts and Jobs Act of 2017 include:

*...