The Los Angeles City Council today renewed a tax break for Internet-based businesses in Los Angeles that was set to expire in December.
Companies that fit the definition of the Internet-based businesses pay $1.01 per every $1,000 in gross receipts, but would have paid the $5.07 rate now being paid by most other businesses, if the council did not take action.
The reduced tax, aimed at attracting internet companies to Los Angeles, will be in effect until 2018. The council also ordered a study of the effects of the tax reduction.
Westside-area City Councilman Mike Bonin, who was behind the extension, said Los Angeles benefits when “smart, creative and innovative technology companies choose to start businesses in L.A.”
“Incentives like this have helped draw start-ups to the Southland and I am thrilled that the council is continuing to work toward making Los Angeles a great place to do business,” he said.
In Venice, Google rents about 100,000 square-feet of space in the Frank Gehry-designed “binoculars” building on Main Street — for about 500 employees — that was originally occupied by Chiat/Day Advertising.
Councilman Bob Blumenfield, who partnered with Bonin to get the ordinance passed, said Internet businesses in Los Angeles were growing in importance to the regional economy and he was “pleased to see the council support these businesses and ensure that this highly mobile industry continues make its home and thrive within the city of Los Angeles.”
Among the businesses that wrote in to support of extending the Internet business incentive included online dating companies eHarmony and Grindr, messaging application company Snapchat and e-commerce site Shopzilla.
An eHarmony executive, COO Armen Avedissian, wrote that the company, now headquartered in Santa Monica, was “very seriously considering a move to the city of L.A. upon the expiration of our lease in July 2015.”
Mayor Eric Garcetti also backed the extension of the tax break, which he helped author while a councilman, writing in a letter to council members that the tax break was instrumental in persuading game developer Riot Games to move to Los Angeles.
Facebook has also opened offices in the city since the tax rate was reduced for Internet businesses in 2010, he wrote.
