HLS 23RS-580 ORIGINAL
2023 Regular Session
HOUSE BILL NO. 197
BY REPRESENTATIVE DEVILLIER
TAX/CORP FRANCHISE: Phases-out the corporation franchise tax over five years
1 AN ACT
2To amend and reenact R.S. 47:601(B), (C)(2), and (D), to enact R.S. 47:601(E) and 611(C),
3 and to repeal R.S. 47:601.1 and 601.2, relative to the corporate franchise tax; to
4 provide for the rate of the corporate franchise tax; to provide for a reduction and
5 eventual elimination of the corporate franchise tax; to prohibit the levy of an initial
6 tax under certain circumstances; to repeal the automatic reduction in the corporate
7 franchise tax rate under certain circumstances; to provide for applicability; to provide
8 for an effective date; and to provide for related matters.
9Be it enacted by the Legislature of Louisiana:
10 Section 1. R.S. 47:601(B), (C)(2), and (D) are hereby amended and reenacted and
11R.S. 47:601(E) and 611(C) are hereby enacted to read as follows:
12 §601. Imposition of tax
13 * * *
14 B. It is the purpose of this Section to require the payment of this tax to the
15 state of Louisiana by domestic corporations for the right granted by the laws of this
16 state to exist as such an organization, and by both domestic and foreign corporations
17 for the enjoyment, under the protection of the laws of this state, of the powers, rights,
18 privileges, and immunities derived by reason of the corporate form of existence and
19 operation. The tax hereby imposed pursuant to the provisions of this Chapter shall
20 be in addition to all other taxes levied by any other statute.
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1 C.
2 * * *
3 (2) The term "foreign corporation" shall mean and include all such business
4 organizations as hereinbefore described in this Paragraph (1) of this Subsection
5 which are organized under the laws of any other state, territory or district, or foreign
6 country.
7 * * *
8 D. The annual tax levied on taxable capital pursuant to the provisions of this
9 Chapter shall be at the following rates:
10 (1) For taxable periods beginning before January 1, 2023, the annual rates
11 of tax shall be one dollar and fifty cents for each one thousand dollars, or major
12 fraction thereof, on the first three hundred thousand dollars of taxable capital and
13 three dollars for each one thousand dollars, or major fraction thereof, in excess of
14 three hundred thousand dollars of taxable capital.
15 (2) Except as otherwise provided in R.S. 47:601.1 or 601.2, for For taxable
16 periods beginning on or after January 1, 2023, and before January 1, 2024, the annual
17 rate of tax shall be two dollars and seventy-five cents for each one thousand dollars,
18 or major fraction thereof, in excess of three hundred thousand dollars of taxable
19 capital.
20 (3) For taxable periods beginning on or after January 1, 2024, and before
21 January 1, 2025, two dollars and twenty cents for each one thousand dollars, or
22 major fraction thereof, in excess of three hundred thousand dollars.
23 (4) For taxable periods beginning on or after January 1, 2025, and before
24 January 1, 2026, one dollar and sixty-five cents for each one thousand dollars, or
25 major fraction thereof, in excess of three hundred thousand dollars.
26 (5) For taxable periods beginning on or after January 1, 2026, and before
27 January 1, 2027, one dollar and ten cents for each one thousand dollars, or major
28 fraction thereof, in excess of three hundred thousand dollars.
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1 (6) For taxable periods beginning on or after January 1, 2027, and before
2 January 1, 2028, fifty-five cents for each one thousand dollars, or major fraction
3 thereof, in excess of three hundred thousand dollars.
4 E. For taxable periods beginning on or after January 1, 2028, no corporation
5 franchise tax shall be assessed, levied, or collected by the state nor paid by domestic
6 or foreign corporations.
7 * * *
8 §611. Newly taxable corporation
9 * * *
10 C. For taxable periods beginning on or after January 1, 2028, no initial tax
11 shall be assessed, levied, or collected by the state nor paid by domestic or foreign
12 corporations.
13 Section 2. R.S. 47:601.1 and 601.2 are hereby repealed in their entirety.
14 Section 3. The provisions of this Act shall apply to corporate franchise tax periods
15beginning on or after January 1, 2024.
16 Section 4. This Act shall become effective on January 1, 2024.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 197 Original 2023 Regular Session DeVillier
Abstract: Phases-out the corporate franchise tax over five years beginning Jan. 1, 2024.
Present law (R.S. 47:601 et seq.) establishes the corporation franchise tax which is levied
on every domestic and foreign corporation exercising its charter, qualified to do business,
or actually doing business in La. The corporation franchise tax is also levied on any
domestic or foreign corporation owning or using any part of its capital, plant, or other
property in La.
Present law provides, beginning Jan. 1, 2023, that the rate of the tax shall be $2.75 per
$1,000 of taxable capital above $300,000.
Present law provides for the determination of taxable capital for purposes of levying the
corporation franchise tax as well as the tax treatment of capital stock, surplus and undivided
profits, and the allocation of taxable capital. Present law further provides for the
administration of the tax as well as the collection and payment of the tax.
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Present law requires every corporation or other entity subject to the franchise tax to pay only
an initial tax of $110 in the first accounting period in which it becomes subject to the tax.
After the first closing of the corporate books, the tax is payable as provided in present law.
Proposed law provides for a five-year phase-out of the corporate franchise tax by reducing
the tax rate as follows:
(1)For taxable periods beginning on or after Jan. 1, 2024, and before Jan. 1, 2025, $2.20
for each $1,000, or major fraction thereof, in excess of $300,000.
(2)For taxable periods beginning on or after Jan. 1, 2025, and before Jan. 1, 2026, $1.65
for each $1,000, or major fraction thereof, in excess of $300,000.
(3)For taxable periods beginning on or after Jan. 1, 2026, and before Jan. 1, 2027, $1.10
for each $1,000, or major fraction thereof, in excess of $300,000.
(4)For taxable periods beginning on or after Jan. 1, 2027, and before Jan. 1, 2028, $0.55
for each $1,000, or major fraction thereof, in excess of $300,000.
(5)For taxable periods beginning on or after Jan. 1, 2028, no corporation franchise tax
shall be assessed, levied, or collected by the state nor paid by domestic or foreign
corporations on taxable capital.
Proposed law provides that no initial tax shall be levied or collected by the state nor paid by
domestic or foreign corporations for taxable periods beginning on or after Jan. 1, 2028.
Present law suspends the state corporation franchise tax levied on corporations at the rate
of $1.50 for each $1,000 of taxable capital, or major fraction thereof, on the first $300,000
for small business corporations that have taxable capital of $1M or less for franchise tax
periods beginning between July 1, 2020, and July 1, 2023.
Proposed law repeals present law.
Present law requires the reduction of the corporate franchise tax rate if, beginning April
1, 2024, and each April first thereafter the prior fiscal year's actual corporate income and
franchise tax collections as reported in the state's accounting system exceed the actual
corporate income and franchise tax collections for the fiscal year ending June 30, 2019,
adjusted annually by the growth factor provided for in existing constitution. If the
conditions in present law are met, corporate franchise tax rates are reduced beginning the
following Jan. first.
Present law requires the reduced rate to be calculated by multiplying the current rate by the
difference between one and the percentage change in corporate income and franchise tax
collections in excess of the corporate income and franchise tax collections for Fiscal Year
2018-2019 adjusted annually by the growth factor as provided for in present constitution.
Further prohibits this reduction unless both of the following conditions are met:
(1)The prior fiscal year's actual total tax, licenses, and fees exceed the actual total tax,
licenses, and fees for Fiscal Year 2018-2019, adjusted annually by the growth factor
provided for in existing constitution.
(2)The Budget Stabilization Fund balance as determined by the treasurer is at least 2.5%
of the total state revenue receipts from the prior fiscal year.
Proposed law repeals present law.
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HB NO. 197
Proposed law applies to all corporate franchise tax periods beginning on or after Jan. 1,
2024.
Effective Jan. 1, 2024.
(Amends R.S. 47:601(B), (C)(2), and (D); Adds R.S. 47:601(E) and 611(C); Repeals R.S.
47:601.1 and 601.2)
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