The Kentucky Investment Act

KRS tit. XII, ch. 154, subch. 31

in effect

KRS 154.31-010 Definitions for subchapter

154.31-010. Definitions for subchapter As used in this subchapter: (1) "Agreement" means an agreement entered into pursuant to KRS 154.31-030 between the authority and an approved company; (2) "Alternative fuel production" has the same meaning as in KRS 154.32-010; (3) "Approved company" means an eligible company that has received approval from the authority for a sales and use tax incentive under this subchapter; (4) "Approved recovery amount" means the maximum sales and use tax incentive recoverable by an approved company as established in the agreement; (5) "Authority" means the Kentucky Economic Development Finance Authority; (6) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in KRS 154.32-010; (7) "Coal severing and processing" means activities resulting in the eligible company being subject to the tax imposed by KRS Chapter 143; (8) "Department" means the Department of Revenue; (9) "Economic development project" means: (a) 1. The acquisition or construction of a new facility; or 2. The expansion or rehabilitation of an existing facility; or (b) The installation and equipping of a facility; by an eligible company at a specific site in the Commonwealth to be used in an activity conducted by the approved company; (10) "Electronic processing" means the use of technology having electronic, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities, now in existence or later developed to perform a service or technology activity; (11) (a) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or other legal entity with a proposed economic development project that is primarily engaged in or planning to be engaged in one (1) or more of the following activities within the Commonwealth: 1. Manufacturing; 2. Nonretail service or technology activities; 3. Agribusiness; 4. Headquarters operations; 5. Alternative fuel, gasification, energy-efficient alternative fuel or renewable energy production; 6. Carbon dioxide or hydrogen transmission pipelines; 7. Coal severing and processing; 8. Hospital operations; or 9. In operating or developing a tourism attraction. (b) "Eligible company" does not include any company whose primary activity to be conducted within the Commonwealth is forestry, fishing, the provision of utilities, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, food services, or public administration services; (12) "Eligible expenses" means the amount expended for: (a) Building and construction materials permanently incorporated as an improvement to real property as part of an economic development project; or (b) Equipment used for research and development or electronic processing at an economic development project; if the Kentucky sales and use tax imposed by KRS Chapter 139 is paid on the purchase of the materials or equipment at the time of purchase; (13) "Energy-efficient alternative fuel production" has the same meaning as in KRS 154.32-010; (14) (a) "Equipment" means tangible personal property which is subject to depreciation under Sections 167 and 168 of the Internal Revenue Code, including assets which are expensed under Section 179 of the Internal Revenue Code, and that is used in the operation of a business. (b) "Equipment" does not include any tangible personal property used to maintain, restore, mend, or repair machinery or equipment, consumable operating supplies, office supplies, or maintenance supplies; (15) "Gasification process" has the same meaning as in KRS 154.32-010; (16) "Headquarters" means the principal office where the principal executives of the entity are located and from which other personnel, branches, affiliates, offices, or entities are controlled; (17) "Hospital" has the same meaning as in KRS 154.32-010; (18) "Manufacturing" has the same meaning as in KRS 154.32-010; (19) "Nonretail service and technology" has the same meaning as in KRS 154.32-010; (20) "Project term" means the time for which an agreement shall be in effect. The project term shall be established in the agreement and shall not exceed seven (7) years; (21) "Renewable energy production" has the same meaning as in KRS 154.32-010; (22) (a) "Research and development" means experimental or laboratory activity that has as its ultimate goal the development of new products, the improvement of existing products, the development of new uses for existing products, or the development or improvement of methods for producing products. (b) "Research and development" does not include testing or inspection of materials or products for quality control purposes, efficiency surveys, management studies, consumer surveys or other market research, advertising or promotional activities, or research in connection with literary, historical, or similar projects; and (23) "Tourism attraction" has the same meaning as tourism attraction project in KRS 148.851. Effective: June 29, 2023 History: Amended 2023 Ky. Acts ch. 75, sec. 21, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 117, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 30, effective July 14, 2018. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 20, effective June 26, 2009.

KRS 154.31-020 Annual incentive cap established -- Requirements for qualification for incentives -- Maximum incentives available to an approved company

154.31-020. Annual incentive cap established -- Requirements for qualification for incentives -- Maximum incentives available to an approved company (1) The maximum amount of sales and use tax incentives that may be committed in each fiscal year by the authority shall be capped at twenty million dollars ($20,000,000) for building and construction materials, and five million dollars ($5,000,000) for equipment used for research and development, electronic processing, or flight simulation. (2) (a) To qualify for the sales and use tax incentives available under this subchapter, an eligible company shall make a minimum investment of at least five hundred thousand dollars ($500,000) in an economic development project, including the cost of land, but excluding the cost of labor. (b) To qualify for the sales and use tax incentive available under this subchapter for electronic processing equipment, in addition to the requirements of paragraph (a) of this subsection, the eligible company shall spend an aggregate amount of at least fifty thousand dollars ($50,000) on electronic processing equipment installed as part of the economic development project. (3) (a) The maximum sales and use tax incentive available to an approved company under this subchapter is the total amount of sales and use tax paid on purchases made on the following items, up to the approved recovery amount after approval by the authority: 1. Building and construction materials; 2. Research and development equipment; 3. Electronic processing equipment; and 4. Flight simulation equipment. (b) An approved company may qualify for a sales and use tax incentive in more than one (1) category listed in paragraph (a) of this subsection for the same economic development project. If the authority approves an eligible company to receive the sales and use tax incentives in more than one (1) category, the authority shall allocate the incentives to the appropriate cap established by subsection (1) of this section. Effective: July 14, 2018 History: Amended 2018 Ky. Acts ch. 199, sec. 31, effective July 14, 2018. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 21, effective June 26, 2009.

KRS 154.31-030 Application, approval, and monitoring process for sales and use tax incentive -- Standards and criteria for approval -- Execution of agreement -- Annual report

154.31-030. Application, approval, and monitoring process for sales and use tax incentive -- Standards and criteria for approval -- Execution of agreement -- Annual report (1) The application, approval, and monitoring process under this subchapter shall be as follows: (a) An eligible company with a proposed economic development project may submit an application to the authority. The application shall include the information required by subsection (3) of this section; (b) Upon review of the application and any additional information submitted, the authority may, by resolution, approve an economic development project and authorize the negotiation and execution of an agreement pursuant to subsection (4) of this section. Approval granted pursuant to this subsection shall apply to a specific economic development project at a specific location within the Commonwealth; (c) Upon approval, the authority shall notify the department that an approved company is eligible for a sales and use tax incentive under this subchapter and shall provide the department with the information necessary to monitor the use of incentives by the approved company. The authority shall notify the department if the agreement is extended or amended, or if the incentives are transferred, and shall provide the department with the information necessary to update its records; and (d) The approved company shall be eligible to receive the sales and use tax incentives authorized by the agreement upon the earlier of the completion of the economic development project or expiration of the project term. The approved company shall apply to the department for the sales and use tax incentives as provided in KRS 139.535, and shall, during the project term, submit all information required by the department as provided in KRS 139.535. (2) The authority may establish standards for the review of applications and the approval of eligible companies through the promulgation of administrative regulations in accordance with KRS Chapter 13A. In reviewing applications and establishing standards, the authority shall consider the creditworthiness of the eligible company, employment opportunities for Kentucky residents, wages to be paid, whether the eligible company is participating in other incentive programs pursuant to KRS Chapter 154 for the project, the likelihood that the project will be an economic success, and any other factors the authority determines to be relevant. (3) The application submitted by an eligible company shall include but not be limited to the following: (a) A description of the proposed economic development project; (b) The anticipated minimum investment in the proposed economic development project; (c) An estimate of the approved recovery amount that the company will seek; (d) A timeline for completion of the proposed economic development project; (e) Supporting documentation, as requested by the authority; (f) Payment of any applicable application fee required by the authority; and (g) Any other information requested by the authority. (4) (a) Upon approval of an eligible company, the authority may enter into an agreement with the approved company. The terms of the agreement shall be determined by negotiations between the authority and the approved company, and shall include but not be limited to the following provisions: 1. The project term; 2. A description of the economic development project; 3. The total approved recovery amount in each category for which the approved company is eligible; 4. That the approved company shall maintain all records and documentation relating to eligible expenditures and the Kentucky sales and use tax paid, and shall provide those records and documentation to the authority or the department upon request; 5. That the approved company shall execute information-sharing agreements prescribed by the department with contractors, vendors, and other related parties to verify the costs of and payment of sales and use tax on the tangible personal property eligible for the sales and use tax incentive under this subchapter; 6. That the sales and use tax incentives shall not be assignable or transferable without written notice to the authority and approval of the authority; and 7. Any other provisions not inconsistent with this subchapter. (b) The project term established in the agreement may be extended by approval of the authority for good cause shown; however, the term shall not be extended beyond seven (7) years from the date of approval. (c) An approved company may transfer or assign its designation as an approved company upon prior notification to the authority and approval of the authority in a manner prescribed by the authority. (5) The contents of a company's filings under this subchapter shall be subject to the Kentucky Open Records Act, KRS 61.870 to 61.884. (6) By November 1 of each year, the authority shall prepare an annual report and make it available on the Cabinet for Economic Development Web site as required in KRS 154.12-2035. Effective: July 14, 2018 History: Amended 2018 Ky. Acts ch. 199, sec. 32, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 134, sec. 9, effective July 15, 2014. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 22, effective June 26, 2009.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=37791Fetched: 10/20/2026