While often referred to as a singular "Life Science credit," Massachusetts offers an array of life sciences tax incentives for the life sciences industry, which consist of multiple tax credits, a corporate excise deduction, and a sales and use tax exemption. The original tax incentives enacted in "An Act Providing for the Investment in and Expansion of the Life Sciences Industry in the Commonwealth," (St. 2008, c. 130), include the following tax credits: the Life Sciences FDA User Fees Tax Credit, the Life Sciences Refundable Investment Tax Credit, and the Life Sciences Research Tax Credit (and also a modified version of the standard Research Tax Credit); as well as a corporate excise deduction allowing for the deduction of qualified clinical expenses for certain drugs that would not be fully deductible otherwise, and a sales and use tax exemption for materials used to construct a life sciences facility. Effective January 1, 2011, the Life Sciences Refundable Jobs Tax Credit was added to this program (St. 2011, c. 58, §§ 65, 70). Most recently, the Angel Investor Tax Credit was added to the ambit of life sciences tax incentives (St. 2016, c. 219, § 139).
While most of the tax credits are available to life sciences companies subject to either the personal income tax or the corporate excise, the Life Sciences Research Tax Credit and the modified version of the standard Research Tax Credit are available only to life sciences companies subject to a corporate excise, and the Angel Investor Tax Credit is only available to personal income taxpayers.
The Life Sciences Tax Incentive Program is administered by the Massachusetts Life Sciences Center (MLSC). The MLSC is charged with reviewing and, as appropriate, approving applications from life sciences companies, which certifies them as eligible for various life sciences tax incentives. The life sciences tax incentives are available only to certified life sciences companies to the extent authorized by the MLSC. Prior to receiving any life sciences tax incentives, a company must be certified by the MLSC. To become a certified life sciences company, the company must apply to the MLSC by a date set by the MLSC. The company must be registered to do business in Massachusetts, maintain at least 22810 full-time employees as of the end of the previous calendar year, and be in good standing with the Secretary of the Commonwealth and the Massachusetts Department of Revenue.
In evaluating an applicant, the MLSC considers certain criteria, such as whether the applicant has shown it has the ability to create and retain jobs for five years, as well as general considerations including a wide geographic distribution of life sciences operations in Massachusetts, a wide distribution of life sciences technologies and industries supported by the MLSC, and diversity among businesses at different stages of product development and commercialization. The MLSC particularly encourages companies from outside Greater Boston to apply.
All of the life sciences tax incentives provided to a life sciences company are subject to recapture if the life sciences company's certification is revoked by the MLSC.
Origin: M.G.L. c.63, §§31M, 38M(k), 38U, 38W, 38V, and 38CC; c. 64H, §6(xx)