Be it enacted by the General Assembly of Virginia:
1. That § 58.1-339.4 of the Code of Virginia is amended and reenacted as follows:
§ 58.1-339.4. Qualified equity and subordinated debt investments tax credit.
A. As used in this section:
"Commercialization investment" means a qualified investment in a qualified technology business that was created to commercialize research developed at or in partnership with an institution of higher education.
"Equity" means common stock or preferred stock, regardless of class or series, of a corporation; a partnership interest in a limited partnership; or a membership interest in a limited liability company, which is not required or subject to an option on the part of the taxpayer to be redeemed by the issuer within three years from the date of issuance.
"Qualified investment" means a cash investment in a qualified technology business or a qualified small business in the form of equity or subordinated debt; however, an investment shall not be qualified if the taxpayer who holds such investment, or any of such taxpayer's family members, or any entity affiliated with such taxpayer, receives or has received compensation from the qualified business in exchange for services provided to such business as an employee, officer, director, manager, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For the purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation.
"Qualified small business" means a business that (i) is primarily engaged, or is primarily organized to engage, in business in a field that is other than a technology-related field; (ii) has annual gross revenues of no more than $3 million in its most recent fiscal year; (iii) has its principal office or facility in the Commonwealth; (iv) is engaged in business primarily in or does substantially all of its production in the Commonwealth; (v) has not obtained during its existence more than $3 million in aggregate gross cash proceeds from the issuance of its equity or debt investments, not including commercial loans from national or state-chartered banking or savings and loan institutions; (vi) has no more than 50 employees who are employed within the Commonwealth; and (vii) has been designated as such pursuant to subsection C.
"Qualified technology business" means a
business which (i) has annual gross revenues of no more than $3 million in its
most recent fiscal year, (ii) has its principal office or facility in the
Commonwealth, (iii) is engaged in business primarily in or does substantially
all of its production in the Commonwealth, (iv) has not obtained during its
existence more than $3 million in aggregate gross cash proceeds from the
issuance of its equity or debt investments (not including commercial loans from
chartered banking or savings and loan institutions), and (v) is primarily
engaged, or is primarily organized to engage, in
"Subordinated debt" means indebtedness of a corporation, general or limited partnership, or limited liability company that (i) by its terms required no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or secured by any assets of the issuer or any other person; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.
B. For taxable years beginning on or after January 1, 1999, a taxpayer shall be allowed a credit against the tax levied pursuant to §§ 58.1-320 and 58.1-360 in an amount equal to 50 percent of such taxpayer's qualified investments in a qualified technology business during such taxable year. For taxable years beginning on or after January 1, 2012, but before January 1, 2015, a taxpayer shall be allowed a credit against the tax levied pursuant to § 58.1-320 in an amount equal to 10 percent of such taxpayer's qualified investments in a qualified small business during the taxable year.
No credit shall be allowed under this section to any taxpayer that has committed capital under management in excess of $10 million and engages in the business of making debt or equity investments in private businesses, or to any taxpayer that is allocated a credit as a partner, shareholder, member or owner of an entity that engages in such business.
C. A business seeking to be a qualified small business shall apply to the Department to be certified as the same in order to receive qualified investments eligible for the credit pursuant to this section and shall provide to the Department such information as the Department deems necessary to demonstrate that it meets all qualifications set forth under this section. A business shall apply each year in order to be certified as a qualified small business. No credit shall be allocated to a taxpayer pursuant to an investment in a small business not first certified by the Department as a qualified small business.
2. That the fourth enactment of Chapter 853 of the Acts of Assembly of 2009 is amended and reenacted as follows:
4. That no investment shall be qualified pursuant to § 58.1-339.4 of the Code of Virginia if (i) the otherwise qualified small business or qualified technology business performs research in Virginia on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos, or (ii) the taxpayer making the otherwise qualified investment under § 58.1-339.4 performs research in Virginia on human cells or tissue derived from induced abortions or from stem cells obtained from human embryos. The foregoing provision shall not apply to research conducted using stem cells other than embryonic stem cells.
3. That the Tax Commissioner shall develop guidelines implementing the provisions of this act. Such guidelines shall be exempt from the provisions of the Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).