Louisiana: New corporate income tax, franchise tax, sales tax laws

Louisiana: Corporate income tax, franchise tax

Louisiana’s special legislative session ended with lawmakers agreeing to tax increases and spending cuts, many of which are temporary, in an effort to address a budget deficit for the fiscal year beginning July 1, 2016.

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Corporate income tax and franchise tax

Among the corporate income and franchise tax provisions are measures that:

  • Restore the dividend exclusion for dividends received from banks
  • Expand the corporate franchise tax to apply to all corporations doing business in Louisiana through an interest in a pass-through entity and that revise the definition of “corporation” 
  • Impose a limit on a net operating loss (NOL) carryover deduction and clarify that it cannot exceed 72% of Louisiana’s net income for any return filed on or after July 1, 2015
  • Adopt a related-party expense disallowance rule (i.e., addback provisions)
  • Re-order the application of NOLs from prior years
  • Provide rules for the order in which credits can be applied
  • Reduce enterprise zone credits and remove hotels from eligibility
  • Allow for the electorate to vote on a state constitutional amendment to eliminate the corporate deduction for federal income taxes paid

Sales and use taxes

The legislature also passed bills that expand the state’s sales and use tax nexus rules; that impose limits on compensation allowed vendors for collecting and remitting sales and use tax on behalf of the state; and that impose limits on the exclusions and exemptions previously available for sales and use tax purposes. In general, the effective date for the sales and use tax changes is April 1, 2016.

There is also a new 1% (one percent) state-level sales and use tax that will be effective April 1, 2016, through June 30, 2018. 


Read a March 2016 report [PDF 191 KB] prepared by KPMG LLP: Louisiana: Special Session Bills Signed Into Law

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