Minnesota House Bill HF4535

Minnesota 2023-2024 Regular Session

• Introduced: 3/4/24
• Refer: 3/4/24

Caption

Department of Revenue report on corporate tax base erosion required.

Impact

The proposed legislation aims to equip lawmakers with a thorough understanding of the challenges posed by corporate tax base erosion, providing a crucial analysis of how current laws may be undermined by corporate strategies. If enacted, the bill could lead to significant alterations in the state's corporate franchise tax, potentially requiring changes to compliance structures and the way businesses report income. The emphasis on worldwide combined reporting, if recommended by the report, could drastically increase transparency and ensure that corporations contribute fairly to Minnesota's revenue.

Summary

House File 4535 mandates a comprehensive study and report from the Minnesota Department of Revenue regarding corporate tax base erosion. By January 1, 2025, the Department is instructed to provide detailed insights on the extent of erosion within Minnesota's corporate tax framework, alongside legislative options to address the issue. The report will cover various details, such as the international corporate structures contributing to this erosion and the potential need for reform in state tax policies, such as the implementation of worldwide combined reporting.

Contention

There are likely to be points of contention surrounding the bill, particularly around the administrative complexities that could arise from changes such as adopting worldwide combined reporting. Opponents may argue that increased compliance requirements could burden businesses, especially smaller corporations that lack the resources to manage additional reporting. Furthermore, questions may also arise about the potential implications for the state's competitiveness and attractiveness to businesses regarding its tax structure.