This Minnesota House bill (H.F. No. 1533) seeks to amend the state's corporate franchise tax laws by modifying the definition of a "domestic corporation" to include certain foreign corporations. Specifically, it proposes changes to Minnesota Statutes 2024, section 290.01, subdivision 5, by expanding the classification of domestic corporations to include companies incorporated in or significantly operating from "tax havens." These changes would make such corporations subject to Minnesota's corporate franchise tax.

Key provisions of the bill: - Expands the definition of "domestic corporation" to include: 1. Entities incorporated in a tax haven. 2. Entities with significant business activity in a tax haven (reporting at least 20% of their income from such jurisdictions). 3. Entities with at least 20% of their average property, payroll, and sales factors within the U.S. and the District of Columbia. - Amends and introduces new subdivisions to the following Minnesota tax statutes:
- Section 290.0132 (likely regarding foreign income inclusions). - Section 290.0134 (presumably outlining exceptions or additional corporate tax responsibilities). - Section 290.17, subdivision 4 (possibly adjusting tax allocation rules for income earned both inside and outside the state). - Repeals Section 290.21, subdivisions 9 and 10, which may include previous tax exemptions or outdated provisions related to foreign corporations.

Purpose:

This bill aims to combat tax avoidance by multinational corporations that shift profits to low-tax jurisdictions (i.e., tax havens). By broadening the definition of domestic corporations to include entities with substantial ties to tax havens, the state seeks to ensure such corporations contribute their fair share of Minnesota's corporate franchise tax.

If enacted, these changes could increase tax revenue by taxing multinational corporations with significant operations in tax havens.