Who Must File
South Carolina imposes an annual corporate income tax at the rate of 5% on the South Carolina taxable income of every corporation transacting, conducting, or doing business within the state, or having income from within the state.
Source: S.C. Code § 12-6-530
The terms "transacting," "conducting," and "doing business" include transacting or engaging in any activity for the purpose of financial profit or gain.
Source: S.C. Code § 12-6-530
The tax applies to any entity taxed as a corporation for federal income tax purposes, regardless of whether these activities are carried on through intrastate, interstate, or foreign commerce. This includes traditional C corporations, limited liability companies that have elected to be taxed as corporations for federal purposes, and other entities that use corporate tax rates federally.
Source: S.C. Code § 12-6-530; SCDOR Corporate Tax Overview
Both domestic corporations (organized under South Carolina law) and foreign corporations (organized under another state's or country's law) that are qualified to do business in South Carolina must file if they meet the activity or income thresholds.
Source: SCDOR Corporate Tax Overview
## Exempt Entities
The following corporations are exempt from the corporate income tax imposed by § 12-6-530:
- Banks as defined in S.C. Code § 12-11-10
- Building and loan associations as defined in S.C. Code § 12-13-10
- Insurance companies
- Nonprofit corporations organized pursuant to Chapter 36 of Title 33 for the purpose of providing water supply and sewage disposal or a combination of those services
- Organizations exempt from income taxes pursuant to S.C. Code § 33-49-120
Source: S.C. Code § 12-6-550
Federal tax-exempt organizations qualifying under Internal Revenue Code §§ 501 through 528 are generally exempt from South Carolina corporate income tax, although their unrelated business income remains subject to tax at the 5% rate.
Source: S.C. Code § 12-6-540; SCDOR Tax Information & Education Document, Chapter 2
## S Corporations
An S corporation that has a valid federal election under Internal Revenue Code Subchapter S is not subject to South Carolina corporate income tax to the extent it would be exempt from federal corporate income tax. Each shareholder must include their share of South Carolina S corporation income on their individual income tax return.
Source: S.C. Code § 12-6-590
S corporations remain subject to the annual corporate license fee (franchise tax) and must file an annual information return (Form SC1120S).
Source: SCDOR S Corporation Information
Corporate Income Tax Rate
South Carolina imposes an annual income tax at a flat rate of 5% on the South Carolina taxable income of every corporation transacting, conducting, or doing business within the state or having income within the state.
Source: S.C. Code § 12-6-530
Apportionment Formula
South Carolina apportions the business income of multistate corporations using a single-sales-factor formula. After certain income is allocated under South Carolina law, the remaining net income is multiplied by the sales factor to determine the portion apportioned to South Carolina. The sales factor is defined in S.C. Code § 12-6-2280.
Source: S.C. Code § 12-6-2252
Tax Base and Starting Point
South Carolina corporate taxable income begins with federal taxable income as determined under the Internal Revenue Code. This federal amount is then modified as specified in Article 9 of Chapter 6 (covering additions and subtractions to gross income, adjusted gross income, and taxable income) and is subject to allocation and apportionment rules in Article 17 of Chapter 6.
Filing Deadline
South Carolina corporate income tax returns must be filed on or before the 15th day of the fourth month following the close of the taxable year. For calendar-year C corporations, this means returns are due April 15.
Fiscal-year corporations. C corporations with fiscal tax years other than December 31 must file by the 15th day of the fourth month after their fiscal year ends. For example, a corporation with a fiscal year ending June 30 must file by October 15.
Foreign corporations without U.S. offices. Returns for foreign corporations that do not maintain an office or place of business in the United States must be filed on or before the 15th day of the sixth month following the taxable year.
Extension of time to file. South Carolina grants an automatic extension of time for filing a corporate income tax return. The Department of Revenue accepts a federal extension: if the corporate return is received within the time as extended by the IRS, it satisfies the South Carolina filing deadline. A corporation may also file Form SC1120-T, Application for Automatic Extension of Time to File Corporation Tax Return, to request an extension directly from South Carolina. The South Carolina Department of Revenue states that payment of the balance due through MyDORWAY (the Department's online portal) automatically submits a filing extension request without requiring a separate form.
Extension to file, not to pay. The extension applies only to the deadline for filing the return. Any tax due must still be paid by the original due date—the 15th day of the fourth month following the close of the taxable year. Paying the estimated balance by the original deadline is necessary to avoid penalties and interest on any unpaid tax.
Annual report and license fee timing. Corporations must file an annual report (Schedule D, part of Form SC1120) and pay the corporate license fee. Unless otherwise provided, corporations must file the annual report on or before the 15th day of the fourth month following the close of the taxable year, the same deadline as the income tax return. The annual report and license fee may be extended in the same manner that corporate income tax returns are extended for federal income tax purposes.
Source: S.C. Code § 12-6-4970
Source: S.C. Code § 12-20-20
Source: SCDOR C Corporation Filing Requirements
Source: SCDOR Corporate Tax Overview
Corporate License Fee (Franchise Tax)
South Carolina imposes an annual corporate license fee on every corporation required to file an annual report with the South Carolina Department of Revenue. The corporate license fee is deemed to be a tax for purposes of administrative and enforcement provisions of Title 12. While the statute uses the term "corporate license fee," practitioners commonly refer to this levy as a franchise tax.
Rate and Calculation
The annual license fee is $15.00 plus $1.00 for each $1,000 (or fraction thereof) of capital stock and paid-in or capital surplus of the corporation, as shown by the records of the corporation on the first day of the taxable year in which the annual report is filed. In no case may the license fee be less than $25.00. The license fee must be paid on or before the original due date for filing the annual report—the 15th day of the fourth month following the close of the taxable year, which for calendar-year corporations is April 15.
Measurement of Capital Stock and Paid-In or Capital Surplus
For purposes of calculating the license fee, capital stock and paid-in or capital surplus is the amount reported on the taxpayer's "applicable financial statement." The applicable financial statement is a statement covering the taxable year, selected in the following priority order: (a) a statement required to be filed with the Securities and Exchange Commission; (b) a certified audited balance sheet used for credit purposes, shareholder reporting, or another substantial nontax purpose; (c) a balance sheet required to be provided to a federal, state, or local government entity; or (d) a balance sheet used for credit purposes, shareholder purposes, or any other purpose. If a taxpayer has statements described in more than one category, the applicable financial statement is the statement with the lowest designation in the priority list.
Who Must Pay
South Carolina law requires every domestic corporation (incorporated under South Carolina law), every foreign corporation (incorporated under another state's or country's law) qualified to do business in South Carolina, and any other corporation required by S.C. Code § 12-6-530 to file income tax returns to file an annual report and pay the corporate license fee. Because S.C. Code § 12-2-25 provides that for purposes of Title 12 the term "corporation" includes a limited liability company taxed for South Carolina income tax purposes as a corporation, LLCs classified as corporations for federal income tax purposes must pay the South Carolina corporate license fee.
S corporations that have a valid federal election under Internal Revenue Code Subchapter S remain subject to the annual corporate license fee and must file an annual report, even though they are not subject to South Carolina corporate income tax on their net income.
Apportionment for Multistate Corporations
If a corporation's business is conducted partly within and partly outside South Carolina, the corporation may prorate the license fee in the same manner and on the same basis as its net income is apportioned under S.C. Code §§ 12-6-2250 through 12-6-2295. However, the minimum license fee of $25.00 may not be apportioned.
Combined Returns
When a combined income tax return is filed, the license fee is measured by the total capital and paid-in or capital surplus of each corporation considered separately, without offset for investment of one corporation in the capital or surplus of another corporation in the group. The minimum license fee of $25.00 applies to each corporation in the combined group.
Initial License Fee
A domestic corporation must file an initial annual report and pay the minimum license fee of $25.00 with the Secretary of State when it files its initial articles of incorporation. A foreign corporation must file an initial annual report and pay the minimum license fee when it files its application for certificate of authority with the Secretary of State. A corporation that does not file an application for certificate of authority with the Secretary of State but is required to file a South Carolina income tax return must file the initial annual report and pay the minimum license fee to the Department of Revenue on or before 60 days after initially doing business, or using a portion of its capital, in South Carolina.
Utilities and Electric Cooperatives
Certain companies—including express companies, street railway companies, navigation companies, waterworks companies, power companies, electric cooperatives, light companies, gas companies, telegraph companies, and telephone companies—pay a different license fee under S.C. Code § 12-20-100 in place of the fee imposed by § 12-20-50. For these companies, the license fee is based on the fair market value of property owned and used within South Carolina and gross receipts derived from regulated business within the state, rather than on capital stock and paid-in or capital surplus.
Credit Reduction
License fees may be reduced by credits provided in S.C. Code § 12-6-3410 (job development credit) or § 12-6-3480 (headquarters credit).
Source: S.C. Code § 12-20-50
Source: S.C. Code § 12-20-60
Source: S.C. Code § 12-20-70
Source: S.C. Code § 12-20-20
Source: S.C. Code § 12-20-40
Source: S.C. Code § 12-20-100
Source: S.C. Code § 12-20-160
Source: S.C. Code § 12-20-175
Source: S.C. Code § 12-2-25