The District of Columbia Fiscal Year 2016 Budget Support Act of 2015 was signed by the mayor on August 11, 2015. The Act is now transmitted to Congress for a mandatory 30-day review period before becoming law.
Only days when Congress is in session are counted in determining the 30-day period. Thus, the exact date when the legislation would become law is difficult to predict.
One provision—the Combined Reporting Clarification Amendment Act of 2015—makes changes to the District’s combined reporting provisions that were effective for tax years after December 31, 2010.
Under D.C. law, the water’s-edge combined group includes the entire income and apportionment factors of any member doing business in a “tax haven.”
Originally, the District defined “tax haven” as a jurisdiction that, for the tax year in question, had no effective tax, or a nominal tax on the relevant income and:
The statute, however, did not identify specific tax haven jurisdictions.
Under the new 2015 Budget Support Act, the definition of “tax haven” is expanded to include a list of 39 countries that are considered tax havens (i.e., for D.C. purposes of determining the combined group). The 39 listed tax haven jurisdictions are:
|Antigua and Barbuda||Grenada||The former Netherlands Antilles|
|Bahamas||Isle of Man||Samoa|
|Belize||Liechtenstein||St. Kitts and Nevis|
|British Virgin Islands||Malta||St. Vincent and the Grenadines|
|Cayman Islands||The Marshall Islands||Turks and Caicos Islands|
|Cook Islands||Mauritius||U.S. Virgin Islands|
Accordingly, all income and apportionment factors of entities operating in these jurisdictions are to be included in the D.C. water’s-edge combined group.
The D.C. Council is to review the tax haven list biennially or as needed, and the D.C. Chief Financial Officer is to submit revisions to the Council for consideration as the CFO considers necessary.
The Act does not specifically address when the changes are effective and labels the law change as a “clarification.”
For more information, contact a tax professional with KPMG’s State and Local Tax practice:
Leighanne Scott | +1 (703) 286-8251 | email@example.com
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. 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. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. 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. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.