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Supermarket Tax Incentives

Supermarket Tax Incentives

Through the Supermarket Tax Exemption Act of 2000, the District waives certain taxes and fees to grocery stores that locate in specific neighborhoods. The incentive encourages development and investment in areas lacking access to groceries and fresh food.

Qualifying supermarkets may be eligible to receive one or more of the following benefits for up to 10 years after development or renovation:

  • Real property tax exemption;
  • Business license fee exemption;
  • Personal property tax exemption;
  • Sales and use tax exemption on building materials necessary for contruction.

The first step to qualify for the Supermarket Tax Exemption is to check eligibility requirements. For eligibility certification, the supermarket must satisfy all of the following:

    • Must be located in an eligible area (see eligible area map)
    • Basic Business License with the declared use of “Public Health: Retail Food Establishment – Grocery Store”
    • Store inspection by the DC Office of Tax and Revenue
    • Certificate of Occupancy with use declared as a grocery store
    • There is no size minimum, but documentation of inventory must demonstrate that the store offers a full line of meat, seafood, fruits, vegetables, dairy products, dry groceries, household products, and sundries
    • Tax Certification Affidavit from the DC Office of Tax and Revenue
    • Clean Hands Self Certification from the DC Department of Consumer and Regulatory Affairs
    • Proof of ownership or leasehold interest
      • If owner:
        • A copy of the recorded deed, or real property assessment records from the DC Office of Tax and Revenue indicating the Eligible Applicant as the property owner
      • If tenant:
        • Copy of the lease
        • Satisfactory proof that the owner of the real property leases the land or structure to the supermarket at a fair market rent reduced by the amount of the real property tax exemption; this proof should be provided via a statement from the applicant that directs DMPED to the applicable section of the lease that outlines the pass-through of the tax exemption
        • Statement from the property owner asserting support of the application to receive supermarket tax incentives
    • A copy of the First Source Employment Agreement between the Government of the District of Columbia and the supermarket, as well as satisfactory proof that the supermarket is in compliance with the requirements of the First Source Employment Program set forth in subchapter X of Chapter 2 of Title 2
    • Satisfactory proof that the “development” requirement of DC Official Code § 47-3801(1) has been met:

The Eligible Applicant must provide evidence, such as copies of contracts for construction or renovation, that the applicant has or will build a new building, or make an investment of 50% or more of the adjusted basis of an existing building, as calculated for District income tax purposes, which should be proven by (a) establishing the adjusted basis for the building via tax returns or certified accounting documents and (b) establishing the cost of the rehabilitation via construction contract(s) and/or invoices.

If the applicant is also seeking the sales and use tax exemption on the purchase of building materials related to the development of the supermarket, then the applicant must provide detailed information regarding type and cost of building materials purchased, including receipts.

    • A statement of the current and proposed future use of the real property, indicating the types of activities carried on by the Eligible Applicant during the past twelve (12) months, and the extent to which such activities were carried on within the District of Columbia. If the Eligible Applicant did not operate for the full year, the Eligible Applicant must explain what it anticipates will be such activities for the current year.

 

For inquiries, questions, or to begin the qualification process, email [email protected]

To see if you business is located in an eligible area, enter your address on the map at incentives.dc.gov.

Link to supermarket tax incentive law in DC Code

Potential Grocery Store Sites


Food Policy Initiatives

For more informatin on other food policy initiatives within the District of Columbia, visit the Office of Planning's Food Policy Page and visit the Sustainable DC Plan website.