By: SC&H Group
SC&H Group’s Tax Services team offers the following blog post about a significant change in who can qualify for the Biotechnology Investment Incentive Tax Credit (BIITC) in Maryland.
Thanks to recent changes in the state of Maryland’s Biotechnology Investment Incentive Tax Credit (BIITC), early-stage biotech companies have the opportunity to attract additional funding from investors.
Effective May 23, 2016, the Maryland Department of Commerce has adopted amendments to the regulations impacting the BIITC.
Under this change, the definition of investment now includes “convertible debt” issued on or after July 1, 2015. The just-published regulations define convertible debt as “a debt, bond, or loan issued by a qualified Maryland biotechnology company to a qualified investor for a contemporaneous exchange of cash or cash equivalents expressed in U.S. dollars, at a risk of loss, convertible into a specified amount of stock, partnership or membership interests, or other ownership interest.”
Essentially, this would also include most forms of convertible debt being utilized in this arena.
These debt instruments must adhere to all of the regulations that apply to the equity-based biotech credit. As a reminder, this credit can be 50 percent of one’s investment, and up to $250,000.
These regulations will clarify the changes made to the law previously, and will facilitate greater investment into one of the state’s most valuable industries.