Tax committee passes former tax haven bill

Bill turned into resolve to require MRS to look into worldwide reporting

On Thursday, March 10, the Joint Standing Committee on Taxation voted along party lines “ought-to-pass as amended” on LD 428, An Act to Prevent Tax Haven Abuse, sponsored by Rep. Denise Teppler (D-Topsham). Democrats on the committee voted in favor of LD 428 while Republicans voted against it.

LD 428 is a carryover bill that the Maine State Chamber testified in opposition to last session. As originally drafted, the bill requires corporations that file unitary income tax returns in Maine to include income from certain jurisdictions from outside the U.S. in net income when apportioning among tax jurisdictions. The bill would have established a “blacklist” of countries considered to be tax havens.
 
The amended version of LD 428 was turned into a resolve, titled Resolve, Directing a Review and Report Regarding Worldwide Combined Reporting of Certain Corporations for Income Tax Purposes. The amendment eliminates language that blacklisted certain countries. Instead, the amended version would direct Maine Revenue Services (MRS) to research what it would involve to transition Maine to worldwide combined reporting with a water’s-edge elective; why some states have adopted worldwide reporting; and the proposed federal legislation that U.S. Sen. Angus King is working on. The amendment would require MRS to report back to the Taxation committee next session.
 
The Maine State Chamber’s position is that this legislation is unnecessary at this time, and that Maine should wait to see what the federal government does with respect to the treatment of foreign income before any changes are made at the state level. It is our understanding that the Biden Administration is proposing changes fundamentally very different from this resolve. The Biden Administration is proposing changes to the Global Intangible Low Taxed Income (GILTI) provision and not considering movement towards worldwide combined reporting.
 
The amendment will be drafted by the committee’s analyst and return to the Taxation committee for language review before being reported out of committee. If you have any questions, please contact Linda Caprara, senior government relations specialist, by calling (207) 623-4568, ext. 106, or by emailing lcaprara@mainechamber.org.