Purpose of the Bill

The bill aims to modify corporate taxation laws in Minnesota, particularly focusing on the inclusion of foreign corporations in the unitary business group for taxation purposes. This is intended to ensure a broader tax base by including the income of foreign entities that have business operations connected to the state.

Main Provisions

• Expansion of Unitary Group: The bill proposes to expand the unitary tax group to include foreign corporations and foreign entities. This means these entities' incomes will be considered part of the combined income of affiliated businesses for tax purposes.

• Net Income Definition: The definition of net income is updated for various entities, including real estate investment trusts and regulated investment companies, aligning with federal taxable income definitions. New rules are added for how net income should be calculated for foreign corporations.

• Information and Reporting Requirements: The Commissioner of Revenue is given the authority to require foreign corporations to use profit and loss statements, which must conform to generally accepted accounting principles (GAAP) or United States Securities and Exchange Commission (SEC) filings, for determining net income.

• Repeal of Existing Legislation: Specific subdivisions in Minnesota Statutes section 290.21 are repealed to eliminate outdated or conflicting provisions.

Significant Changes to Existing Law

• Inclusion of Foreign Business Income: Previously, certain foreign corporations may not have been part of Minnesota's taxation system. This bill changes that by considering their income if they are unitary with Minnesota businesses.

• Regulatory Compliance: This bill introduces new compliance measures for foreign corporations, mandating standardized reporting in line with international and federal accounting standards.

Relevant Terms

• Corporate franchise
• Unitary taxation
• Foreign corporations
• Federal taxable income
• Generally accepted accounting principles (GAAP)
• Minnesota Statutes