City of Philadelphia 

                         Department of Revenue 

                     Keystone Opportunity Zone Programs 

                         Keystone Opportunity Zone 
                 Keystone Opportunity Expansion Zone 
                 Keystone Opportunity Improvement Zone 

         Please complete the Special Credit Schedule (Schedule SC) 
         and file with the Business Income and Receipts Tax return. 

     This booklet is to be used by a Qualified Business to Calculate the 
Zone Tax Credits for the 202 1Business Income and Receipts Tax (BIRT) and the 
                         202 1Net Profits Tax (NPT) 

Qualified Business – Eligibility for the Zone Tax Credits 

In order to qualify for a Zone Business Income and Receipts Tax and a Zone Net Profits Tax credit, a business 
must own or lease real property in one of the Keystone Opportunity Zones (KOZ, KOEZ, KOIZ) from which 
it actively conducts a trade, business or profession. The qualified business must receive initial certification 
from the Pennsylvania Department of Community and Economic Development (“DCED”) that the business is 
located, and is actively engaged in a trade, business or profession within the Zone. The qualified business must 
obtain annual renewal of certification from DCED to continue to qualify for the tax credits. A copy of the 
DCED certification must accompany the filing  of  the  Business  Income  and  Receipts Tax and the Net Profits 
Tax returns in order for  the business to obtain and  maintain  the  tax  credit. 

The methodology for calculating the KOZ/KOEZ/KOIZ credits. 

Pennsylvania SB1412 became Act 79 with the Governor’s signature on July 10, 2008.     Act 79 adopts a two 
(2) factor apportionment formula (i.e. Property & Payroll) for purposes of calculating KOZ/KOEZ/ KOIZ 
credits for Pennsylvania Corporate Net Income Tax (CNI) and ties the Philadelphia BIRT and NPT credit 
calculations to that methodology for tax years beginning after  12/31/2008. 

Section 5 of Act 79 amends 73 P.S. § 820.703 by adding subsection (g) which reads: 

       Determination of exemption – For the purposes of determining an exemption under this 
       section, a tax on or measured by any of the following shall be attributed to business activity 
       conducted within a subzone, improvement zone or expansion zone by applying the 
       apportionment factors under section 515(d): 

    1. Business gross  receipts.

    2. Gross or net income.

    3. Gross or net profits.

73 P.S. § 820.515(d) was amended to remove the Sales factor and to instead use the average of the Property 
and Payroll factors based upon the ratio of KOZ/KOEZ/KOIZ (“KOZ”) to Pennsylvania. 

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Property Factor 

The property factor is a fraction, the numerator of which is the average value of the taxpayer’s real and tangible 
personal property owned or rented and used in the Zone during the tax period and the denominator  of which 
is the average value of all the taxpayer’s real and tangible personal property owned or rented and used in the 
Commonwealth of Pennsylvania during the tax period but shall not include a security interest of any 
corporation as seller or lessor in personal property sold or leased under a conditional sale, bailment lease, 
chattel mortgage or other contract providing for the retention of a lien or title as security for the sales price of 
the property. 

Payroll Factor 

The Payroll Factor is a fraction, the numerator of which is the total compensation paid in the Zone during the 
tax period and the denominator of which is the total compensation paid in the Commonwealth of Pennsylvania 
during the tax period. 

Compensation is paid in the Zone if: 

□ The employee’s service is performed entirely within the Zone;
□ The employee’s service is performed both within and outside the Zone, but the service provided
  outside the Zone is incidental to the service performed within the Zone; or
□ Some of the service is performed in the Zone and the base of operations for the employee or the place
  from which the employee’s service is directed or controlled is in the Zone.

Zone Credit Factor 

The Zone Credit Factor is the total of the Property and Payroll Factors divided by 2. If the qualified business 
does not have employees within Pennsylvania (and therefore a zero in the denominator) that factor is not 
included in the Zone Credit calculation and in effect the Property Factor is the Zone Credit Factor. If there are 
no employees in the Zone but there are employees in Pennsylvania (i.e. zero in the numerator), the factor is 
zero and is included in calculating the Zone Credit Factor. 

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                                                                Philadelphia Tax Identification Number

               Name 

                      Computation of the “Zone” Tax Credit for the 
               202 1Business Income and Receipts Tax and Net Profits Tax            

                                             Zone Credit Factor  

1. Total Average Value of Zone Property
2. Total Average Value of Property in Pennsylvania
3. Zone Property Factor (line 1 divided by line 2)
4. Zone Payroll
5. Total Payroll in Pennsylvania
6. Zone Payroll Factor (line 4 divided by line 5)
7. Total of Zone Factors (line 3 plus line 6)
8. Zone Credit Factor (line 7 divided by the applicable number of   factors)

                      Business Income and Receipts– Zone Credit Calculation 

9. Total Business Income and Receipts Tax Due (from line 3 of the 2021 BIRT return)
10. Zone Business Income and Receipts Tax Credit (line 8 multiplied by line 9)
    Enter on Schedule SC Line 9

                              Net Profits Tax – Zone Credit Calculation 

11. Total Net Profits Tax Due (from line 11 of the 202 1NPT return)
12. Zone Net Profits Tax Credit (line 8 multiplied by line   11)

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                                                            Philadelphia Tax Identification Number

                    Name 

            Allowed Business Income and Receipts Tax Credit on the 2021 Net Profits Tax 

1. BIRT Taxable Net Income (from BIRT return Schedule A, line 14 or B, line 12
                                                     or BIRT EZ page 2 line 5) 
2. BIRT Zone Net Income (line 1 multiplied by Zone Credit Factor – line 8)
3. Difference (line 1 less line 2)
4. Percentage of Net Income to non-corporate partners
   (If no corporate partners, enter 100%)
5. Net Taxable BIRT net income (line 3 multiplied by line 4)
6. Net tax on BIRT net income (line 5 x .0620)
7. Allowed BIRT Credit to be used on NPT return (line 6 x .6)

                     Computation of the 202  Mandatory2 BIRT Estimated Payment            

1. Total Business Income and Receipts Tax Due (from line  5of the 202 1BIRT return)
2. Zone Business Income and Receipts Tax Credit (from line 10 of page 3 of this booklet)
3. 202 2BIRT Estimated Payment Due (line 1 less line 2). Enter here and on line  6of the 
   202 1BIRT return or EZ return.

                             Computation of BIRT return Line  a Credits8     

1. 2020 Mandatory BIRT estimates previously made
2. Other Credits
3. Total of lines 1 and 2 (include on 8a of the BIRT return)

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Completed tax returns (including completed schedule SC), certification approval letter and 
zone credit worksheets should be mailed to: 

Ronda Farrare 
Philadelphia Department of Revenue 
Municipal Services Building Room 400 
1401 JFK Boulevard 
Philadelphia, PA 19102 

Payments with payment coupons should be mailed to: 

Philadelphia Department of Revenue 
PO Box 1393 
Philadelphia, PA 19105-1393 

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