Title 44
Taxation

Chapter 11
Business Corporation Tax

§ 44-11-1. Definitions.

For the purpose of this chapter:

(1)(a) “Captive REIT” means a corporation, trust or association:

(i) That is considered a real estate investment trust for the taxable year under section 856 of the Internal Revenue Code;

(ii) That is not regularly traded on an established securities market; and

(iii) More than fifty percent (50%) of the voting power or value of the beneficial interests or shares of which at any time during the last half of the taxable year, is owned or controlled, directly or indirectly, by a single entity that is subject to the provisions of Subchapter C of Chapter 1 of the Internal Revenue Code; and

(b) “Captive REIT” does not include:

(i) A corporation, trust or association more than fifty percent (50%) of the voting power or value of the beneficial interests or shares of which, at any time during which the corporation, trust or association satisfies item (1)(iii) of this subsection, is owned or controlled, directly or indirectly, by:

(A) A real estate investment trust other than a real estate investment trust described in item (i) of this subsection; or

(B) A person exempt from taxation under § 501(a) of the Internal Revenue Code; or

(C) A listed Australian Property Trust; and

(ii) Subject to regulations that the tax administrator adopts, a real estate investment trust that is intended to become regularly traded on an established securities market and that satisfies the requirements of § 865(A)(5) and (6) of the Internal Revenue Code by reason of § 856(h)(2) of the Internal Revenue Code; and

(c) For purposes of this section, the constructive ownership rules prescribed under § 318(a) of the Internal Revenue Code, as modified by § 856(d)(5) of the Internal Revenue Code, shall apply in determining the ownership of stock, assets or net profits of any person.

(2) “Combined group” means a group of two or more corporations in which more than fifty percent (50%) of the voting stock of each member corporation is directly or indirectly owned by a common owner or owners, either corporate or non-corporate, or by one or more of the member corporations, and that are engaged in a unitary business.

(3) “Common ownership” means more than fifty percent (50%) of the voting control of each member of the group is directly or indirectly owned by a common owner or owners, either corporate or non-corporate, whether or not owner or owners are members of the combined group.

(4) “Corporation” means every corporation, joint-stock company, or association, wherever incorporated, a real estate investment trust, a regulated investment company, a personal holding company registered under the Federal Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., and also a trustee or trustees conducting a business where interest or ownership is evidenced by certificates or other written instruments, deriving any income from sources within this state or engaging in any activities or transactions within this state for the purpose of profit or gain, whether or not an office or place of business is maintained in this state, or whether or not the income, activities, or transactions are connected with intrastate, interstate, or foreign commerce, except:

(i) State banks, mutual savings banks, federal savings banks, trust companies, national banking associations, building and loan associations, credit unions, and loan and investment companies;

(ii) Public service corporations included in chapter 13 of this title, except as otherwise provided in § 44-13-2.2;

(iii) Insurance and surety companies;

(iv) Corporations specified in § 7-6-4, incorporated hospitals, schools, colleges, and other institutions of learning not organized for business purposes and not doing business for profit and no part of the net earnings of which inures to the benefit of any private stockholder or individual, whether incorporated under any general law of this state or by any special act of the general assembly of this state;

(v) Fraternal beneficiary societies as set forth in § 27-25-1;

(vi) Any corporation expressly exempt from taxation by charter;

(vii) Corporations which together with all corporations under direct or indirect common ownership that satisfies the other requirements of this paragraph employ not less than five (5) full-time equivalent employees in the state; which maintain an office in the state; and activities within the state which are confined to the maintenance and management of their intangible investments or of the intangible investments of corporations or business trusts registered as investment companies under the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., and the collection and distribution of the income from those investments or from tangible property physically located outside the state. For purposes of this paragraph, “intangible investments” includes, without limitation, investments in stocks, bonds, notes, and other debt obligations, including debt obligations of affiliated corporations, patents, patent applications, trademarks, trade names, copyrights, and similar types of intangible assets.

(5) “Fiscal year” means an accounting period of twelve (12) months ending on the last day of any month other than December.

(6) “Member” means a corporation included in a unitary business.

(7) “Place of business” means a regular place of business, which, in turn, means any bona fide office, other than a statutory office, factory, warehouse, or other space which is regularly used by the taxpayer in carrying on its business. Where, as a regular course of business, property of the taxpayer is stored by it in a public warehouse until it is shipped to customers, the warehouse is considered a regular place of business of the taxpayer and, where as a regular course of business, raw material or partially furnished goods of a taxpayer are delivered to an independent contractor to be converted, processed, finished, or improved and the finished goods remain in the possession of the independent contractor until shipped to customers, the plant of the independent contractor is considered a regular place of business of the taxpayer. The mere consignment of goods by the taxpayer to an independent factor outside this state for sale at the consignee’s discretion does not constitute the taxpayer as having a regular place of business outside this state.

(8) “Tax haven” means a jurisdiction that, during the tax year in question has no or nominal effective tax on the relevant income and;

(i) Has laws or practices that prevent effective exchange of information for tax purposes with other governments on taxpayers benefiting from the tax regime;

(ii) Has a tax regime which lacks transparency. A tax regime lacks transparency if the details of legislative, legal, or administrative provisions are not open and apparent, or are not consistently applied among similarly situated taxpayers, or if the information needed by tax authorities to determine a taxpayer’s correct tax liability, such as accounting records and underlying documentation is not adequately available;

(iii) Facilitates the establishment of foreign-owned entities without the need for a local substantive presence or prohibits these entities from having any commercial impact on the local economy;

(iv) Explicitly or implicitly excluded the jurisdiction’s resident taxpayers from taking advantage of the tax regime benefits or prohibits enterprisers that benefit from the regime from operating in the jurisdiction’s domestic market; or

(v) Has created a tax regime which is favorable for tax avoidance, based upon an overall assessment of relevant factors, including whether the jurisdiction has a significant untaxed offshore financial/other services sector relative to its overall economy.

(9) “Taxable year” means the calendar year or the fiscal year ending during the calendar year upon the basis of which the net income is computed under this chapter. “Taxable year” means, in the case of a return made for a fractional part of a year under the provisions of this chapter or under regulations prescribed by the tax administrator, the period for which the return is made.

(10) “Taxpayer” means and includes any corporation subject to the provisions of this chapter.

(11) “Unitary business” means the activities of a group of two (2) or more corporations under common ownership that are sufficiently interdependent, integrated, or interrelated through their activities so as to provide mutual benefit and produce a significant sharing or exchange of value among them or a significant flow of value between the separate parts. The term unitary business shall be construed to the broadest extent permitted under the United States Constitution.

(12) “United States” means the fifty (50) states of the United States, the District of Columbia, the United States’ territories and possessions.