Texas enacts taxpayer-friendly revisions to franchise tax

Governor Rick Perry has signed into law Texas HB 500, which provides for certain changes to the Texas franchise tax provisions.

Among other things, the legislation, signed into law on June 14, authorises an elective temporary reduction in franchise tax rates imposed on taxable margin. For reports due in 2014, the rate is reduced from .5 per cent to .4875 per cent (for retailers or wholesalers) and from 1 per cent to .975 per cent for other taxpayers. For reports due in 2015, the elective rates are further reduced to .475 per cent and .95 per cent, respectively, but only if the Comptroller of Public Accounts certifies that certain revenue estimates exceed prior estimates. These rates return to current levels for reports due after 2015.

Among other changes adopted by HB 500 is a determination that receipts from internet hosting activities will only be considered Texas receipts for purposes of applying the margin apportionment formula, if the customer is in Texas…

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