1.1 A bill for an act
1.2 relating to taxation; corporate franchise; treating certain foreign corporations as
1.3 unitary; amending Minnesota Statutes 2024, sections 290.01, subdivision 5, by
1.4 adding a subdivision; 290.0132, by adding subdivisions; 290.0134, by adding
1.5 subdivisions; 290.17, subdivision 4; repealing Minnesota Statutes 2024, section
1.6 290.21, subdivisions 9, 10.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2024, section 290.01, subdivision 5, is amended to read:
1.9 Subd. 5.Domestic corporation.The term "domestic" when applied to a corporation
1.10means a corporation:
1.11 (1) created or organized in the United States, or under the laws of the United States or
1.12of any state, the District of Columbia, or any political subdivision of any of the foregoing
1.13but not including the Commonwealth of Puerto Rico, or any possession of the United States;
1.14or
1.15 (2) which qualifies as a DISC, as defined in section 992(a) of the Internal Revenue Code.;
1.16 (3) which is incorporated in a tax haven;
1.17 (4) which is engaged in activity in a tax haven sufficient for the tax haven to impose a
1.18net income tax under United States constitutional standards and section 290.015, and which
1.19reports that 20 percent or more of its income is attributable to business in the tax haven; or
1.20 (5) which has the average of its property, payroll, and sales factors, as defined under
1.21section 290.191, within the 50 states of the United States and the District of Columbia of
1.2220 percent or more.
1Section 1.
REVISOR EAP/MI 25-0368002/11/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 1533
NINETY-FOURTH SESSION 2.1 EFFECTIVE DATE.This section is effective for taxable years beginning after December
2.231, 2025.
2.3 Sec. 2. Minnesota Statutes 2024, section 290.01, is amended by adding a subdivision to
2.4read:
2.5 Subd. 5d.Tax haven.(a) "Tax haven" means a foreign jurisdiction that:
2.6 (1) has a tax regime that prevents effective exchange of information for tax purposes
2.7with other governments, on foreign-owned entities benefiting from the regime;
2.8 (2) does not open the details of legislative, legal, or administrative provisions relating
2.9to taxation to public scrutiny, make those details apparent, or consistently apply the
2.10jurisdiction's tax provisions among similarly situated taxpayers;
2.11 (3) explicitly or implicitly excludes the jurisdiction's resident taxpayers from taking
2.12advantage of the regime that benefits foreign-owned entities, or prohibits foreign-owned
2.13entities that benefit from the regime from operating in the jurisdiction's domestic market;
2.14or
2.15 (4) has a tax regime that is favorable for tax avoidance, based upon an overall assessment
2.16of factors, as may be determined by the commissioner, including whether the jurisdiction
2.17has a significant untaxed or nominally taxed offshore financial or services sector relative
2.18to its overall economy.
2.19 (b) For purposes of this subdivision, "tax regime" means a set or system of rules, laws,
2.20regulations, or practices by which taxes are imposed on any person, corporation, or entity,
2.21or on any income, property, incident, indicia, or activity under governmental authority.
2.22 (c) A foreign jurisdiction's designation as a tax haven under paragraph (a) does not apply
2.23to the first taxable year after the United States enters into a tax treaty or other agreement
2.24with the foreign jurisdiction that provides for prompt, obligatory, and automatic exchange
2.25of information with the United States government relevant to enforcing the provisions of
2.26federal tax laws applicable to both individuals and all corporations and other entities and
2.27the treaty or other agreement was in effect for the taxable year.
2.28 EFFECTIVE DATE.This section is effective for taxable years beginning after December
2.2931, 2025.
2Sec. 2.
REVISOR EAP/MI 25-0368002/11/25 3.1 Sec. 3. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
3.2to read:
3.3 Subd. 36.Global intangible low-taxed income.The amount of income included under
3.4section 951A of the Internal Revenue Code is a subtraction.
3.5 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.631, 2025.
3.7 Sec. 4. Minnesota Statutes 2024, section 290.0132, is amended by adding a subdivision
3.8to read:
3.9 Subd. 37.Subpart F income.The amount of income included under section 951 of the
3.10Internal Revenue Code is a subtraction.
3.11 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.1231, 2025.
3.13 Sec. 5. Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
3.14to read:
3.15 Subd. 21.Global intangible low-taxed income.The amount of income included under
3.16section 951A of the Internal Revenue Code is a subtraction.
3.17 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.1831, 2025.
3.19 Sec. 6. Minnesota Statutes 2024, section 290.0134, is amended by adding a subdivision
3.20to read:
3.21 Subd. 22.Subpart F income.The amount of income included under section 951 of the
3.22Internal Revenue Code is a subtraction.
3.23 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.2431, 2025.
3.25 Sec. 7. Minnesota Statutes 2024, section 290.17, subdivision 4, is amended to read:
3.26 Subd. 4.Unitary business principle.(a) If a trade or business conducted wholly within
3.27this state or partly within and partly without this state is part of a unitary business, the entire
3.28income of the unitary business is subject to apportionment pursuant to section 290.191.
3.29Notwithstanding subdivision 2, paragraph (c), none of the income of a unitary business is
3.30considered to be derived from any particular source and none may be allocated to a particular
3Sec. 7.
REVISOR EAP/MI 25-0368002/11/25 4.1place except as provided by the applicable apportionment formula. The provisions of this
4.2subdivision do not apply to business income subject to subdivision 5, income of an insurance
4.3company, or income of an investment company determined under section 290.36.
4.4 (b) The term "unitary business" means business activities or operations which result in
4.5a flow of value between them. The term may be applied within a single legal entity or
4.6between multiple entities and without regard to whether each entity is a sole proprietorship,
4.7a corporation, a partnership or a trust.
4.8 (c) Unity is presumed whenever there is unity of ownership, operation, and use, evidenced
4.9by centralized management or executive force, centralized purchasing, advertising,
4.10accounting, or other controlled interaction, but the absence of these centralized activities
4.11will not necessarily evidence a nonunitary business. Unity is also presumed when business
4.12activities or operations are of mutual benefit, dependent upon or contributory to one another,
4.13either individually or as a group.
4.14 (d) Where a business operation conducted in Minnesota is owned by a business entity
4.15that carries on business activity outside the state different in kind from that conducted within
4.16this state, and the other business is conducted entirely outside the state, it is presumed that
4.17the two business operations are unitary in nature, interrelated, connected, and interdependent
4.18unless it can be shown to the contrary.
4.19 (e) Unity of ownership does not exist when two or more corporations are involved unless
4.20more than 50 percent of the voting stock of each corporation is directly or indirectly owned
4.21by a common owner or by common owners, either corporate or noncorporate, or by one or
4.22more of the member corporations of the group. For this purpose, the term "voting stock"
4.23shall include membership interests of mutual insurance holding companies formed under
4.24section 66A.40.
4.25 (f)(1) The net income and apportionment factors under section 290.191 or 290.20 of
4.26foreign corporations and other foreign entities, but excluding a disqualified captive insurance
4.27company, which are part of a unitary business shall not be included in the net income or
4.28the apportionment factors of the unitary business; except that.
4.29 (2) Notwithstanding clause (1), the income and apportionment factors of a foreign entity,
4.30other than an entity treated as a C corporation for federal income tax purposes, that are
4.31included in the federal taxable income, as defined in section 63 of the Internal Revenue
4.32Code as amended through the date named in section 290.01, subdivision 19, of a domestic
4.33corporation, domestic entity, or individual must be included in determining net income and
4Sec. 7.
REVISOR EAP/MI 25-0368002/11/25 5.1the factors to be used in the apportionment of net income pursuant to section 290.191 or
5.2290.20.
5.3 (3) A foreign corporation or other foreign entity which is not included on a combined
5.4report and which is required to file a return under this chapter shall file on a separate return
5.5basis.
5.6 (4) The legislature intends that the provisions of clause (1) and paragraph (g), clause
5.7(1), are not severable from the provisions of section 290.01, subdivision 5, clauses (2) to
5.8(5), and if any of those provisions are found to be unconstitutional, the provisions of this
5.9paragraph are void for the respective taxable years.
5.10 (g)(1) For purposes of determining the net income of a unitary business and the factors
5.11to be used in the apportionment of net income pursuant to section 290.191 or 290.20, there
5.12must be included only the income and apportionment factors of domestic corporations or
5.13other domestic entities that are determined to be part of the unitary business pursuant to this
5.14subdivision, notwithstanding that foreign corporations or other foreign entities might be
5.15included in the unitary business; except that.
5.16 (2) Notwithstanding clause (1), the income and apportionment factors of a foreign entity,
5.17other than an entity treated as a C corporation for federal income tax purposes, that is
5.18included in the federal taxable income, as defined in section 63 of the Internal Revenue
5.19Code as amended through the date named in section 290.01, subdivision 19, of a domestic
5.20corporation, domestic entity, or individual must be included in determining net income and
5.21the factors to be used in the apportionment of net income pursuant to section 290.191 or
5.22290.20.
5.23 (h) Each corporation or other entity, except a sole proprietorship, that is part of a unitary
5.24business must file combined reports as the commissioner determines. On the reports, all
5.25intercompany transactions between entities included pursuant to paragraph (g) must be
5.26eliminated and the entire net income of the unitary business determined in accordance with
5.27this subdivision is apportioned among the entities by using each entity's Minnesota factors
5.28for apportionment purposes in the numerators of the apportionment formula and the total
5.29factors for apportionment purposes of all entities included pursuant to paragraph (g) in the
5.30denominators of the apportionment formula. Except as otherwise provided by paragraph
5.31(f), all sales of the unitary business made within this state pursuant to section 290.191 or
5.32290.20 must be included on the combined report of a corporation or other entity that is a
5.33member of the unitary business and is subject to the jurisdiction of this state to impose tax
5.34under this chapter.
5Sec. 7.
REVISOR EAP/MI 25-0368002/11/25 6.1 (i) If a corporation has been divested from a unitary business and is included in a
6.2combined report for a fractional part of the common accounting period of the combined
6.3report:
6.4 (1) its income includable in the combined report is its income incurred for that part of
6.5the year determined by proration or separate accounting; and
6.6 (2) its sales, property, and payroll included in the apportionment formula must be prorated
6.7or accounted for separately.
6.8 (j) For purposes of this subdivision, "insurance company" means an insurance company,
6.9as defined in section 290.01, subdivision 5b, that is not a disqualified captive insurance
6.10company.
6.11 EFFECTIVE DATE.This section is effective for taxable years beginning after December
6.1231, 2025.
6.13 Sec. 8. REPEALER.
6.14 Minnesota Statutes 2024, section 290.21, subdivisions 9 and 10, are repealed.
6.15 EFFECTIVE DATE.This section is effective for taxable years beginning after December
6.1631, 2025.
6Sec. 8.
REVISOR EAP/MI 25-0368002/11/25 290.21 DEDUCTIONS ALLOWED TO CORPORATIONS.
Subd. 9.Controlled foreign corporations.The net income of a corporation that is included
pursuant to section 951 of the Internal Revenue Code is dividend income.
Subd. 10.Global intangible low-taxed income.Any amounts included in taxable income
pursuant to section 951A of the Internal Revenue Code, are dividend income.
1R
APPENDIX
Repealed Minnesota Statutes: 25-03680