AN ACT Relating to international services; adding a new section to chapter 82.04 RCW; adding a new section to chapter 48.14 RCW; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 82.04 RCW to read as follows:

(1) There may be credited against the tax imposed by this chapter an amount equal to the sum of five percent of the qualified payroll and five percent of the qualified support service expenses incurred by a business that is:

(a) Located within a distressed community; and

(b) Engaged in the business of providing selected international services.

(2) A credit under this section is not available with respect to the relocation of existing jobs in a community in the state to a distressed community.

(3) The annual credit allowed under this section shall be limited to the amount of tax imposed during the year by this chapter.

(4) To receive credit under this section, a business must apply to the department and demonstrate to the department that the business qualifies under this section. An approval under this section is effective for five years from the date of the approval. A business may renew approval under this section.

(5) The department may adopt rules to implement this section.

(6) As used in this section and section 2 of this act:

(a) "Distressed community" means a community empowerment zone approved under RCW 43.63A.700 or a census tract that meets the unemployment and poverty criteria of RCW 43.63A.700;

(b) "Qualified payroll" means the gross wages and benefits paid or accrued, with respect to each employee of the business that is directly involved in providing international services and was hired after the effective date of this section, during the first five years of the employee's employment within a distressed community;

(c) "Qualified support service expenses" means amounts paid by a business, located within a distressed community, engaged in the business of providing international services to any other business located within a distressed community for the reasonable cost of services that are ordinary and necessary to the provision of such international services; and

(d) "Selected international services" means a business that:

(i) Provides any of the following services related directly to the delivery of the service outside the United States or on behalf of persons residing outside the United States: Computer; data processing; information; business consulting; legal; accounting; and financial; and

(ii) Is subject to taxation under RCW 82.04.290(2).

NEW SECTION. Sec. 2. A new section is added to chapter 48.14 RCW to read as follows:

(1) There may be credited against the tax imposed under RCW 48.14.020, an amount equal to the sum of five percent of the qualified payroll and five percent of the qualified support service expenses incurred, by a business that is:

(a) Located within a distressed community; and

(b) Engaged in the business of providing selected international services.

(2) A credit under this section is not available with respect to the relocation of existing jobs in a community in the state to a distressed community.

(3) The annual credit allowed under this section shall be limited to the amount of tax imposed during the year by this chapter.

(4) To receive credit under this section, a business must apply to the commissioner and demonstrate to the commissioner that the business qualifies under this section. An approval under this section is effective for five years from the date of the approval. A business may renew approval under this section.

(5) The commissioner may adopt rules to implement this section.

(6) As used in this section:

(a) "Distressed community" has the same meaning as in section 1 of this act;

(b) "Qualified payroll" has the same meaning as in section 1 of this act;

(d) "Selected international services" has the same meaning as in section 1 of this act.

NEW SECTION. Sec. 3. This act takes effect July 1, 1998.