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2005 LAWS OF MARYLAND
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Ch. 142
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INTO A COMPREHENSIVE TAX TREATY WITH THE UNITED STATES GOVERNMENT
included the interest expense or intangible expense received by the related member
from the corporation; and
3. the aggregate effective tax rate imposed on the amounts
received by the related member is equal to or greater than 4%; or
(iii) in the case of an interest expense, the corporation and the
related member are banks.
(d) (1) Subject to regulations adopted by the Comptroller, the addition
required under subsection (b) of this section does not apply if, in lieu of the 4%
effective tax rate requirement under subsection (c)(3)(ii)3 of this section, the
aggregate effective tax rate imposed on the amounts received by the recipient is
greater than or equal to the aggregate effective tax rate that would have been
imposed on the additional income of the payor corporation if the interest expense or
intangible expense had not been deducted.
(2) For purposes of subsection (c)(3)(ii) of this section, the Comptroller
may provide by regulation for an alternative to the effective tax rate requirement of
subsection (c)(3)(ii)3 of this section if:
(i) the related member:
1. is subject in another state OR IN A FOREIGN NATION THAT
HAS ENTERED INTO A COMPREHENSIVE TAX TREATY WITH THE UNITED STATES
GOVERNMENT to a tax that is measured by gross receipts or is measured by net
capital or net worth; and
2. is not subject in that state OR IN THAT FOREIGN NATION
to a tax measured by net income or receipts; or
(ii) under other circumstances demonstrating to the satisfaction of
the Comptroller that avoidance of any portion of the tax due under this title is not a
principal purpose of the transaction giving rise to the payment of the interest expense
or intangible expense between the corporation and the related member, the
Comptroller determines that it is impractical for a related member that is subject to
tax in this State [or], another state, OR A FOREIGN NATION THAT HAS ENTERED INTO
A COMPREHENSIVE TAX TREATY WITH THE UNITED STATES GOVERNMENT, where
the measure of the tax includes the payment to satisfy the requirements of subsection
(c)(3)(ii) of this section.
(e) If the payor and the recipient are both included in a combined or
consolidated report filed in a jurisdiction:
(1) for purposes of subsection (c)(3)(ii)2 of this section, the measure of the
tax imposed by that jurisdiction shall be deemed to include the interest expense or
intangible expense; and
(2) for purposes of determining the effective rate of tax imposed by the
jurisdiction, the applicable apportionment rate is the lesser of:
- 976 -
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