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3472 VETOES
Senate Bill No. 914
AN ACT concerning
Franchise Tax - International Financial Industry -
Tax Relief
FOR the purpose of providing incentive to financial
institutions to conduct their international financing
business in the State by providing tax relief to
financial institutions from the franchise tax imposed
on them by means of a deduction from their net earnings
of an amount resulting from the conduct of
international financial transactions from their
branches that are established within the State.
BY repealing and reenacting, with amendments,
Article 81 - Revenue and Taxes
Section 128A
Annotated Code of Maryland
(1980 Replacement Volume)
Preamble
WHEREAS, The General Assembly hereby declares that it
would be in the general welfare of the People of the State
that the State become a center for international finance.
Presently, there is little incentive for financial
institutions to establish branches in Maryland because of
the State franchise tax on net earnings of financial
institutions and because of present regulations of the Board
of Governors of the Federal Reserve System. The State
franchise tax on financial institutions means that an
institution engaged in international finance would pay
higher income tax on foreign transactions conducted in
Maryland than would be paid in London, in the Carribean, or
in other off-shore locations. The regulations of the Board
of Governors of the Federal Reserve System prohibit payment
of interest on deposits of less than 30 days and require
financial institutions to maintain a minimal amount as a
reserve. Thus, the General Assembly finds that continuing
this franchise tax on the income from international
financial transactions is strong incentive for financial
institutions to continue to locate in foreign locations and
not in the State of Maryland; and
WHEREAS, This Act is being enacted to help attract the
international banking business, and the attendant jobs and
personal income back to the United States, and particularly
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