Section 1.  [Definition of “domestic corporation”] Expands the definition of “domestic corporation” to include corporations incorporated in a tax haven, (defined in section 2), corporations doing sufficient business in a tax haven to be subject to tax by the tax haven and with 20 percent or more of its income attributable to the tax haven, or corporations having 20 percent or more of the average of their property, payroll, and sales in the United States.  Effective beginning tax year 2013.

Section 2.  [Tax havens]  Enumerates the foreign jurisdictions determined to be tax havens and thereby incorporated into the definition of “domestic corporation.”  Beginning in the first taxable year after a named foreign jurisdiction enters into a tax treaty or similar agreement with the United States that provides for sharing tax information, the jurisdiction’s listing as a tax haven would not apply.  Effective beginning with returns filed for tax year 2013.

Section 3.  [Unitary business principle]  Under current law, the income and apportionment factors of foreign corporations are not included in the combined report and are not subject to Minnesota corporate franchise tax.  This bill would require income from operations in foreign corporations that qualify as tax havens to be reported in the combined report because they would now be deemed domestic corporations.  This section states that the Legislature intends that the provisions of section 1 are not severable from the reporting requirements for the unitary business, but if any of those provisions are found unconstitutional, the reporting requirements are void for any applicable tax years.  Effective beginning with returns filed for tax year 2013.

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