Our Representatives have extensive knowledge on the tax benefits available to your business as a result of operating in certain designated areas such as on Native land, Foreign Trade Zones, and Opportunity Zones. If you would like more information about these designations and exploring the cost-saving benefits they can offer, we have a complete understanding of how to access these benefits and help serve your business long-term.
Pay less Federal, State & Local Sales Tax
Like state governments, tribal governments are considered sovereign governments and not subject to taxation by Federal or State governments. The Supreme Court however, has held that state governments can collect excise taxes on sales to non-members that occur on tribal lands, so long as the incidence of the tax does not fall directly on the tribal government. States and tribes have developed a variety of methods for collecting these taxes where the states choose to do so, including intergovernmental agreements or pre-taxing at the wholesale level. For more info visit Navajo Nation Tax Commission (NNTC)
Indian Investment and Employment Tax:
This incentive allows for faster depreciation of machinery and equipment if used on the Navajo Nation. Usually, many types of machinery are depreciable over seven years; however, under the act, property used on an Indian reservation is depreciable over four years. This incentive reduces the business’ cost of capital by allowing the investor to receive the resulting tax savings sooner. Click here for more information.
Designated USA Foreign Trade Zone
The Navajo Nation is a designated U.S. Foreign Trade Zone (FTZ) geographical area where foreign and domestic goods are treated, for tax and tariff purposes, as if they had never entered the country. As an established FTZ, this presents major cost savings to tribes and businesses through several different avenues. For example, merchandise may be held and stored in an FTZ on U.S. soil without being subject to U.S. customs duties, also known as tariffs (tax). If the goods shipped into the FTZ are then shipped to another FTZ or another country, a U.S. duty will not be assessed on the merchandise. If the goods enter the U.S., a duty will be applied, however, it may be significantly reduced.
There are four ways in which a tribe/tribal corporation such as NAAC can profit from by promoting the Navajo FTZ designation, and tribes may utilize one or all of these options:
Move goods from a foreign country into the U.S.
Move goods from one foreign country to another foreign country
There are approximately 250 FTZ grantees including the Navajo serving locations in all 50 states and Puerto Rico, with many of those grantees serving multiple sites (including subzones). Click here for complete list of FTZ’s.
Designated USA Opportunity Zone
The Navajo Nation is an economically-distressed community that is federally recognized as an Opportunity Zone where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation authority to the Internal Revenue Service.
The tax benefits can include:
A temporary deferral of inclusion in taxable income for capital gains reinvested in an Opportunity Fund.
A step-up in basis for capital gains reinvested in an Opportunity Fund.
A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years.
For more information, visit: Internal Revenue Service (IRS) Opportunity Zone FAQ's