Purpose of the Bill

The bill aims to update Minnesota's taxation system, specifically expanding the scope of unitary taxation to include foreign corporations. This expansion is designed to ensure that multinational companies operating in Minnesota are adequately taxed based on their full scope of operations, including income from foreign subsidiaries.

Main Provisions

• Unitary Taxation Expansion: The bill expands the current definition of a "unitary group" to include foreign corporations. This means that income from foreign entities that are part of the same business enterprise will be included in the taxation calculations under Minnesota's corporate franchise tax.
• Amendments to Income Definition: Updates to the definition of "net income" clarify how federal taxable income is modified for state tax purposes, considering multiple types of entities like corporations, trusts, partnerships, and foreign corporations.
• Commissioner's Discretion: The commissioner of the Minnesota Department of Revenue is granted the authority to require specific accounting or reporting methods, if necessary, including the use of generally accepted accounting principles or compliance with U.S. Securities and Exchange Commission standards for foreign entities.

Significant Changes to Existing Law

• Inclusion of Foreign Entities: By mandating the inclusion of foreign corporations in the unitary tax group, the bill significantly alters how multinational corporations calculate their state tax liabilities, potentially increasing the tax burden on companies with substantial foreign operations.
• Repeal of Sections: The bill proposes the repeal of certain subdivisions in the Minnesota Statutes 2024, specifically section 290.21 subdivisions 9 and 10, which may involve outdated or redundant provisions in light of the new unitary taxation scope.

Relevant Terms

corporate franchise tax, unitary taxation, foreign corporations, net income, Internal Revenue Code, taxpayer, federal taxable income, gross income, Minnesota Department of Revenue, generally accepted accounting principles, U.S. Securities and Exchange Commission, multinational corporations.