Federal & State Tax Credits

1. Department of Energy (DOE) loan guarantees for tribal energy projects. $2 billion in loan guarantees have recently become available to guarantee up to 90 percent of a private loan. Indian tribes or Alaska Native corporations are eligible, and “energy development” is broadly defined. Applications are submitted in rounds every few months.

2. BIA loan guarantees for Indian reservation projects. Tribes can obtain a loan guarantee from the Bureau of Indian Affairs for up to 90 percent of a private loan. The business must be located on or near an Indian reservation and must contribute to the economy of the reservation. The tribe must have at least 20 percent equity in the business. The loans may be used for a variety of purposes including operating capital, equipment purchases, business refinance, building construction, and lines of credit.

3. United States Department of Agriculture (USDA) loan guarantee for rural businesses. The USDA provides loan guarantees ranging from 60-80 percent of a privately financed loan. The business must be located in a rural area (less than 50,000 inhabitants); many Indian reservations meet this requirement. The loan guarantee can be used for: business conversion, land, rights-of-way, buildings, equipment, inventory, and debt refinancing and business acquisitions when it saves or creates jobs.

4. USDA low-interest loans for community facilities. The USDA provides low-interest loans directly, and some grants, for tribal governments to build essential community facilities in rural areas (where many Indian reservations are located). Eligible facilities include: hospitals, clinics, airport hangars, child care centers, fire departments, police stations, prisons, schools, and local food systems.

5. Incentives for foreign investors (Immigrant Investor/EB-5 Visas). With this U.S. government program, foreign investors receive American visas in return for investments that create 10 new jobs. Generally, the investment required is $1 million. However, in rural areas and areas of high unemployment, which includes many Native American reservations, the investment required is only $500,000.

6. Tax exempt bonds (Tribal Economic Development/TED Bonds). There are annual IRS allocations available for tribes to issue governmental bonds that are tax exempt for investors. Bond proceeds used for projects must be located on tribal lands, provide essential governmental functions, and not involve gaming.

1. Preferences for tribal companies (8(a) Preferences). The Small Business Administration’s “8(a) Business Development program” authorizes preferences for minority-owned small businesses in bidding for federal contracts. However, if the company is owned by a tribal government, it receives additional benefits, such as not being subjected to the lower contract amount caps, and sole-source bidding.

2. Preferences for Indian reservation-based businesses (HUBZone Preferences). If a small business is located on Indian lands, and 35 percent of its employees reside on the reservation, the company is eligible for HUBZone (Historically Under-Utilized Business Zone) preferences in the awarding of federal contracts. Benefits include competitive and sole-source contracting and a 10 percent price evaluation preference in full and open contract competitions.

3. Preferences on Bureau of Indian Affairs (BIA) and Indian Health Service (IHS) contracts (Buy Indian Act). Because of the unique treaty responsibilities of the United States, BIA and IHS have the authority to give preferences to Indian and tribally owned companies in procurement contracts.

1. Zoning. Tribes are generally exempt from local, county, and state zoning and land-use restrictions and state permitting requirements.

2. Environmental regulations. Tribes can issue environmental licenses and permits in compliance with tribal and federal environmental requirements.

1. Socially responsible investing. Unlike a privately held company, all profits of a tribal government-owned corporation go back into the tribal corporation and the tribal government’s budget for government expenditures such as education, infrastructure, winter heating assistance, etc. Therefore, investments in tribal government-owned corporations go toward the economic empowerment of historically disadvantaged people.

2. Cultural cachet. While perhaps not a direct financial advantage, many individuals and many countries (such as Germany and Turkey) have a significant interest in Native American tribes and culture. Therefore, the idea of investing in or partnering with Native American tribal government-owned corporation has additional marketing cachet.

1. No federal income tax (on or off tribal land). Like any government-owned entity, tribes and tribal enterprises are exempt from federal income taxes. If a business entity is formed between a tribe and a non-tribal company, the portion owned by the tribe (or the tribal corporation) is in most cases exempt from federal income taxes. This is true regardless of whether the business owned is on or off tribal land. On reservation tribal owned businesses may also be exempt from state income taxes.

2. No state sales tax. Most tribes do not have their own sales taxes. In addition, most states have exemptions from state sales taxes for purchases made by government entities.

3. No state property tax. If the land is located on an Indian reservation, owned by a tribe, and held in “trust” by the federal government, then the land is not subject to state property taxes.

4. No state property improvements tax. Tribal trust lands and tribal-owned improvements on such lands are exempt from state taxation. There are also some circumstances in which this exemption can be extended to non-tribally owned improvements.