Business Privilege Tax in Alabama

Updated on Wednesday 25th November 2020

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According to the Code of Alabama 1975, section 40-14A-22, the Alabama Business Privilege Tax is imposed on businesses incorporated in this state. The tax return and annual report are required in Alabama, but before that, one should discuss all the details with a company formation specialist in USA. Our consultant is ready to help you register a company in Alabama and comply with the tax regulations, plus other necessary formalities.

Short facts about the business privilege tax in Alabama

The business privilege tax in Alabama is imposed on each limited liability company incorporated in the state of Alabama. The Alabama form PPT is imposed on S-corporations while the CPT form is required for C-corporations, in matters of tax return. An important aspect refers to the fact that the business privilege tax stays due every registered year until the entity is legally dissolved, irrespective of whether or not the company is actively doing business in the state of Alabama. Here are other interesting aspects of the business privilege tax in Alabama:
  1. Homeowners associations, governmental agencies, and corporations do not need to pay the business privilege tax in Alabama.
  2. In Alabama, the minimum business privilege tax is USD 100.
  3. Most companies in Alabama pay a maximum business privilege tax of USD 15,000, except for the financial and insurance companies in this state.
  4. The tax rate for Alabama business privilege tax is based on the company’s federal taxable income that is distributed to Alabama.
The Alabama business privilege tax needs to be fully understood from the start, in order to correctly align with the requirements imposed in this state. Please feel free to discuss all the aspects with one of our company formation agents in the USA.

How do I file the Alabama business privilege tax return?

The PPT form is required for Pass-Through Entities like limited liability companies, partnerships, sole proprietorships, and S-corporations. As for C-corporations, the CPT form is required for filling the Alabama business privilege tax return. A copy of the federal tax return, the balance sheet, plus documentation that sustains the exclusion or deduction in the calculation of the taxpayer’s net worth are important documents for Alabama business privilege tax returns. Our company formation specialists in the USA can help you create the documents for tax returns in Alabama. We can handle all the formalities involved.

Alabama business privilege tax deductions

Companies in Alabama can deduct the net amount invested by the business owners in personal property, facilities, equipment, structures, and different components. Even aircraft companies based in Alabama can be subject to business privilege tax deductions. It is important to note that specific businesses that meet the eligibility criteria detailed by the Code of Alabama 1975 can benefit from tax exemptions, as an encouragement to sustain economic growth. All you need to know about tax deductions can be obtained from our team of specialists in USA.

Making investments in Alabama

Alabama presents a great business climate and excellent conditions for company development of local and foreign investors. A series of tax benefits apply to companies established in the Foreign Trade Zones of Alabama. Plus, if the company is developed in a specific area in Alabama, a variety of tax credits apply. The state is home to a wide range of international companies that activate in sectors like manufacturing, automotive, textiles, food& beverages, and many more. The fourth-largest research park in the world is established in Alabama, USA. Many universities, research companies, business incubators, and other organizations benefit from an excellent climate for development and top-performing research. The diversified economy is another solid point in front of international entrepreneurs wanting to start a business in Alabama. We have gathered some interesting facts and figures that highlight the business in Alabama:
  1. Alabama attracted FDI worth around USD 4.2 billion in 2019.
  2. More than 7,000 jobs have been created last year in Alabama.
  3. Foreign direct investments worth around USD 1.8 billion came from Japan only in 2019.
  4. More than 1,100 jobs have been created in Alabama’s rural areas.
  5. More than 17,000 jobs were created in Alabama in 2018, according to
Foreign entrepreneurs interested in the tax regime in Alabama are invited to contact our team of company formation specialists in USA. We have a dedicated team that can handle the requirements and formalities for tax registration in Alabama, in agreement with the type of business you have.

Marc Lazo

Marc Y. Lazo is a lawyer specialized in company formation matters as well as in complex business and commercial litigation. He has tried numerous cases to successful verdict and has obtained multiple six-figure judgments in both state and federal court.