Amendment ID: H3662-2

Amendment 2

Ending Corporate Offshore Havens

Ms. Clark and Ms. Jehlen moves to amend the bill by inserting after section 8 the following section:-

SECTION XXX.  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 subsections:-

(iv) any member that is doing business in a tax haven, where “doing business in a tax haven” is defined as being engaged in activity sufficient for that tax haven jurisdiction to impose a tax under United States constitutional standards. If the member’s business activity within a tax haven is entirely outside the scope of the laws, provisions, and practices that cause the jurisdiction to meet the criteria established in section 32B(c)(3)(vi), the activity of the member shall be treated as not having been conducted in a tax haven.  A member included in a combined group under this subsection shall determine its gross income and deductions for inclusion in the combined report as if it were a corporation incorporated in the United States or formed under the laws of the United States.

(v) When used in this section “tax haven” means a jurisdiction that, during the tax year in question has no or nominal effective tax on the relevant income and:

a. has laws or practices that prevent effective exchange of information for tax purposes with other governments on taxpayers benefiting from the tax regime;

b. has a tax regime that 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;

c. 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;

d. explicitly or implicitly excludes the jurisdiction’s resident taxpayers from taking advantage of the tax regime’s benefits or prohibits enterprises that benefit from the regime from operating in the jurisdiction’s domestic market; or

e. 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. The Commissioner, in his or her discretion, will determine which jurisdictions are tax havens within the meaning of this subsection.

f. This section shall take effect on July 1, 2014.