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oregon corporate activity tax

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November 26, 2018

The due date for the annual CAT return is April 15 and for CAT purposes, all taxpayers will be calendar year filers. The CAT law specifically defines the “commercial activity of a financial institution” and the “commercial activity of an insurer.” The “commercial activity of a financial institution” includes all items of income without deduction for expenses. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. In an effort to raise substantial funds for public education, Oregon enacted a corporate activity tax (CAT) in 2019 (H.B. Click anywhere on the bar, to resend verification email. A person will be considered to have “substantial nexus” with Oregon under various circumstances, including, but not limited to: “Substantial nexus” also exists when a person has a “bright-line” presence in Oregon. Oregon’s new corporate activity tax kicks in Jan. 1, 2020, and requires businesses and individuals with more than $750,000 of Oregon commercial activity to register with the state or face penalties. in addition. One of the temporary rules recently sent to the Oregon Secretary of State provides guidance on determining whether a group of “persons” is engaged in a unitary business and clarifies that traditional tests and criteria, such as centralization of management, economies of scale and functional integration, will be applied for CAT regime purposes. The KPMG logo and name are trademarks of KPMG International. Another temporary rule provides that the time for filing an annual CAT return may be extended for six months after the due date if the taxpayer files an application for an extension of time to file in accordance with the draft rule. “Commercial activity of an insurer” includes all items of income without deduction for expenses and all items of income reported on the statement of income accompanying the annual statement required under Ore. Rev. In May 2019, Gov. While the Oregon CAT is a “corporate activity tax,” the Oregon CAT is imposed on persons with taxable com mercial activity and substantial nexus with Oregon. The new tax is effective for tax years beginning on or after Jan. 1, 2020, and it imposes a corporate activity tax on each person with taxable commercial activity for the privilege of doing business in Oregon. Basic information on the Corporate Activity Tax​​, High-level summaries of the rules and topics to help with taxpayer compliance​​​​. 4. The legislation accomplishes the following: The CAT is in addition to the state's current corporate income tax. The law includes several amendments to Oregon’s Corporate Activity Tax (CAT) statute and is effective retroactively as of January 1, 2020, the original CAT effective date. An Overview of Oregon’s Corporate Activity Tax. Use the CAT estimated payments worksheet to help with calculations. “Corporate Activity Tax” (Oregon CAT). • For the sale of tangible personal property if the property is delivered to a purchaser in Oregon. section 731.574 to be filed with the Director of the Department of Consumer and Business Service. Similar to the corporate income tax, a unitary group will register, file, and pay the tax under the CAT regime as a single taxpayer and may exclude receipts from intercompany transactions among group members. The tax imposed under this section is an annual privilege tax for the calendar year and shall be remitted quarterly to the Department of Revenue. Get the latest KPMG thought leadership directly to your individual personalized dashboard. The Corporate Activity Tax would harm Oregon’s business tax environment. There are provisions in the CAT law that require the value of certain property brought into Oregon to be included in the measure of “taxable commercial activity.” A person or unitary group that intended to avoid the CAT must include the fair market value of property transferred into Oregon in its taxable commercial activity for the tax year the property was transferred into Oregon. It’s now expected to be signed into law by Governor Kate Brown. We want to ensure that you are kept up to date with any changes and as such would ask that you take a moment to review the changes. 3427 imposes a corporate activity tax (CAT) applicable to tax years beginning on or after January 1, 2020. If the reporting person for a financial institution is a non-bank financial organization, “commercial activity of a financial institution” includes all items of income reported in accordance with generally accepted accounting principles. 3427, the CAT generally imposes a tax of 0.57% on Oregon-sourced “taxable commercial activity” plus $250, less a subtraction for 35% of the greater of the “cost inputs” or “labor costs” apportioned to Oregon. Oregon’s CAT is measured on a business’s commercial activity–the total amount a business realizes from transactions and activity in Oregon. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance. The Department of Revenue in recent weeks has been actively soliciting input from CAT stakeholders; issued a list of CAT-related FAQs, and sent to the Oregon temporary CAT rules. The tax rate for the CAT is 0.57% of taxable commercial activity over $1 million plus $250. © 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. House Bill (HB) 3427A, a bill that would create an Oregon corporate activity tax (CAT), passed in the state house and senate. The February 1st deadline to make the 4th quarter payment for the Oregon Corporate Activity Tax (CAT) is coming up on us quickly. The governor in May 2019 signed into law House Bill 3427 that, among other measures, adopts a new corporate activity tax (CAT) to fund education spending. OREGON CORPORATE ACTIVITIES TAX FAQ What is the Corporate Activities Tax (CAT)? However, only businesses or unitary groups with commercial activity sourced to Oregon of $1 million or more must file a return and pay the levy under the CAT regime. The first payments are due in April next year. Estimated CAT payments for the previous calendar quarter will be due on or before the last day of January, April, July, and October of each year and must be made by electronic funds transfer (EFT). A taxpayer is subject to the annual corporate activity tax for doing business during any portion of such calendar year. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. You may be required to make quarterly estimated payments as well. The CAT is not a transactional tax, such as a retail sales tax, or an income tax. There are over 40 specific types of receipts excluded from the definition of “commercial activity.”  Some of the excluded receipts represent amounts (taxes, surcharges) that are paid over to the government—amounts that if included in commercial activity would potentially lead to double taxation (distributive income received from a pass-through entity), or amounts that are required per contracts to be paid over to third parties. Businesses are facing a broad change to state tax law in 2020 with the implementation of the Corporate Activity Tax. Adopts a new Corporate Activity Tax (CAT) imposed on all types of business entities. Business owners, accountants and lawyers all over Oregon are scratching their heads over the new corporate activity tax. The rule clarifies that a taxpayer can petition the Department for use of an alternative apportionment method if the use of the statutory method does not fairly represent the labor cost or cost input subtraction attributable to the taxpayer’s commercial activity. The new tax is effective on Jan. 1, 2020, and will apply in addition to the current Oregon corporate and personal income taxes. KPMG International and its member firms are legally distinct and separate entities. The Oregon CAT is a separate tax and may be imposed regardless of any Oregon income or excise tax; a taxpayer may be subject to both Oregon income tax and CAT. The rules for sourcing commercial activity are very similar to the market-based sourcing rules that apply for corporate income tax purposes. Revenue from the CAT will be transferred to the Fund for Student Success and will be used for education spending. Although there is a temporary rule addressing property brought into Oregon, it does not provide meaningful guidance on how a taxpayer can establish that CAT avoidance was not intended. #OregonCAT​.​, Corporate Activity Tax training materials, Corporation filing information and requirements, Corporation, Business, and Fiduciary e-filing, Corporation excise and income tax penalties and interest, Cigarette and tobacco products inspection process, Oregon Tax e-File Cigarette and Tobacco Uniformity Program, Basic information on the Corporate Activity Tax, High-level summaries of the rules and topics to help with taxpayer compliance​. In addition to the Corporate Activity Tax, C corporations must pay Oregon’s Corporate Income Tax: Calculate Tax Base: Source Commercial Activity: • For real property, to the extent the property is in Oregon. A temporary rule provides guidance (including examples) on calculating and apportioning the 35% cost inputs or labor cost subtraction. The Oregon Corporate Activity Tax is a new additional tax reporting obligation that is separate from the Oregon Corporate Excise Tax. Oregon has no tax on general sales and use, inventory, intangible property or capital stock/net worth.. General Business. Oregon’s corporate activity tax is effective beginning January 1, 2020. The latest addition are 12 short subject-specific training videos to help taxpayers better understand key elements of the CAT. You will not continue to receive KPMG subscriptions until you accept the changes. Heads up! Brown signed into law the new Oregon Corporate Activity Tax. All rights reserved. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. Effective for tax years beginning on or after January 1, 2020, the CAT is imposed on each person with taxable commercial activity for the privilege of doing business in Oregon. Signed by Oregon’s governor on May 16, H.B. “Commercial activity” means the total amount realized by a person, arising from transactions and activity in the regular course of the person’s trade or business, without deduction for expenses incurred by the trade or business. Accordingly, there is a broad definition of “taxpayer,” which includes The so-called Corporate Activities Tax (CAT) is a consumption-based, business entity-level gross receipts tax, passed by the Oregon Legislature during the 2019 legislative session. If the reporting person for a financial institution is a holding company, “commercial activity of a financial institution” includes all items of income reported on the FR Y-9 filed by the holding company. The amount deducted must be apportioned to Oregon “in the manner required for apportionment of income under Or. taxpayer’s commercial activity in Oregon. If you would like to sign up for additional information as it becomes available, please The resources include PowerPoint presentations on registration and making payments. 3427, which will impose a new Oregon corporate activity tax (CAT) on “commercial activity” (defined below) in Oregon. General business information from Oregon Department of Revenue.. Stat. This subtraction cannot exceed 95% of the taxpayer’s commercial activity in Oregon. Businesses must register when they meet the economic nexus threshold of “commercial activity” sourced to Oregon in excess of $750,000. Separate and distinct from the CAT is not intended to address the circumstances of any particular individual or.. Employee to prepare the return on time employee to prepare the return on time return on time kept. New tax under the CAT can email cat.help.dor @ oregon.gov or call 503-945-8005 annually to be filed the... The new levy set to take effect on Jan. 1, 2020 2019 state business tax in addition to new. 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