Businesses new to Richmond are getting a reprieve this summer from a loathed city tax.
A law passed last week by the Richmond City Council will exempt new companies and businesses that relocate to the city from paying gross receipts taxes, also known as the BPOL tax, for their first two years of operation.“It passed 9-0, without any opposition or controversy, the way I like it,” said City Council President Charles Samuels, who introduced the measure.
Samuels said the new law would go into effect July 1.
“That gives the administration time to create the necessary flags so, when a new business or relocating business applies for a business license, it’s understood that they don’t owe any BPOL tax,” he said.
The business, professional and occupational license tax – or BPOL – is paid annually based on gross sales and varies from business to business. For example, a retailer pays 20 cents for every $100 in sales on gross receipts over $100,000 as a result of the tax. Those in real estate and professional services, such as law firms, pay 58 cents per $100 in gross receipts.
Last year, the city collected about $30 million in BPOL taxes.
The tax isn’t popular among high-grossing professional services companies – such as law firms and financial services firms – that can rack up a substantial bill.
Samuels also introduced a measure that creates a commission to study how the city can ease the tax burden on existing businesses to compete with the surrounding counties, which have a lower BPOL tax rate. That might come up for a council vote in March, he said.
If created, the commission would last about 18 months, which means that any recommendations to lower the BPOL tax could realistically be in place when the two-year exemption expires.