Corporate income tax:
Corporations are taxed only on the portion of their net taxable income allocated and apportioned to the state. The state imposes no inventory tax, no gross receipts tax, no state sales tax, and no personal income tax.
Sales and use taxes:
The state levies neither a sales nor a use tax on businesses. Boroughs and cities may impose a sales and use tax of up to 7 percent on sales, rents, and services, and on use, storage, or consumption of tangible property within the city or borough limits.
The state imposes no property tax. Real property is subject to taxation by cities and boroughs. A separate annual tax of 20 mills is levied statewide on the true and full value of property used in unrefined gas and oil exploration, production, or pipeline transportation.
Oil and Gas Production Tax:
The state imposes a profits-based tax on oil and gas production. This tax structure was recently modified by the MAP Act, and the new tax structure takes effect on January 1, 2014. Under the new structure, the base rate is 35% of profits. There are also several tax credits available to reduce liability, including credits targeted for new production, small producers, and production in Cook Inlet.
The Education Credit is a non-transferable credit applicable to the Corporate Income Tax, Fisheries Business Tax, Fishery Resource Landing Tax, Insurance Premium Tax, Title Insurance Premium Tax, Mining License Tax, Oil and Gas Production Tax, and the Oil and Gas Property Tax. It is a non-transferable credit for contributions to vocational educational programs, accredited Alaska universities or colleges for educational purposes or facilities, annual intercollegiate sports tournaments, Alaska Native educational programs, and facilities that qualify under the Coastal American Partnership. It is 50% of annual contributions up to $100,000, 100% of the next $200,000, and 50% of annual contributions beyond $300,000. The credit cannot exceed $5,000,000 annually across all eligible tax types. The credit at these rates is effective from January 1, 2011 until December 31, 2020, at which point the maximum credit for any taxpayer is $150,000 per year.
Oil and gas credits:
Alaska has several tax credits for oil and gas production in both the North Slope region and Cook Inlet. These include credits for exploration, development of frontier basins, development of new areas, and production of new oil.
The Alaska Exploration Incentives Act allows deduction of up to $20 million of qualified costs - including personnel, transportation, fuel, camp, communications, geochemical and geophysical, and contractual - for new mines. The exploration credits are site specific and may be assigned to successors in interest. The law provides 100 percent credit for eligible exploration costs against future mining license tax, corporate tax, and royalties on production. Credits are limited to no more than 50 percent of the taxes or royalties due the state in any given year and must be taken within 15 years of beginning production. To facilitate record keeping, the credits must be certified annually, with all submitted relevant data kept confidential for three years.
Alaska State Contact:
Alaska Department of Revenue
550 West 7th Avenue, Suite 500
Anchorage, AK 99501
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.