HOUSE DOCKET, NO. 1382        FILED ON: 1/18/2017

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1501

The Commonwealth of Massachusetts

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PRESENTED BY:

Josh S. Cutler

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to closing off-shore tax haven loopholes.

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PETITION OF:

HOUSE DOCKET, NO. 1382        FILED ON: 1/18/2017

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1501

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act relative to closing off-shore tax haven loopholes.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

Section 32B of chapter 63 of the General Laws, as most recently amended by section 125 of chapter 240 of the Acts of 2010, is hereby amended by adding after subsection (c)(3)(iii), the following new subsection:-

(iv) any member incorporated in a jurisdiction defined as a tax haven by the commissioner.

The commissioner shall establish a list of tax haven jurisdictions. In establishing a list of tax havens, the commissioner shall designate a tax haven as a jurisdiction that (1) for a particular tax year in question has no, or nominal, effective tax on the relevant income; (2) has laws or practices that prevent effective exchange of information for tax purposes with other governments regarding taxpayers subject to, or benefitting from, the tax regime; (3) 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; (4) 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; and (5) explicitly or implicitly excludes the jurisdiction’s resident taxpayers from taking advantage of the tax regime benefits or prohibits enterprises that benefit from the regime from operating in the jurisdiction’s domestic market.

The commissioner may also designate a jurisdiction as a tax haven based upon an overall assessment of relevant factors, including whether the jurisdiction has created a tax regime which is favorable for tax avoidance and has a significant untaxed offshore financial or other services sector relative to its overall economy.

Tax haven shall not include a jurisdiction that has entered into a comprehensive income tax treaty with the United States, which the Secretary of the Treasury has determined is satisfactory for purposes of Section 1(h)(11)(C)(i)(II) of the Internal Revenue Code.

On a biennial basis, the commissioner shall establish a list of tax haven jurisdictions and shall submit the list to the Legislature. This report shall be made available to the public.