Ch. 556

2004 LAWS OF MARYLAND

3. THE EFFECTIVE RATE OF TAX PAID BY THE RELATED
MEMBER TO THIS STATE AND OTHER STATES OR POSSESSIONS OF THE UNITED
STATES OR FOREIGN NATIONS IN THE AGGREGATE ON THE AMOUNTS RECEIVED BY
THE RELATED MEMBER FROM THE CORPORATION IS EQUAL TO OR GREATER THAN

4%; OR

3. THE EFFECTIVE RATE OF TAX AGGREGATE EFFECTIVE
TAX RATE IMPOSED IN THE AGGREGATE ON THE AMOUNTS RECEIVED BY THE
RELATED MEMBER FROM THE CORPORATION BY THIS STATE, BY OTHER STATES OR
POSSESSIONS OF THE UNITED STATES, AND BY FOREIGN NATIONS THAT HAVE
ENTERED INTO COMPREHENSIVE TAX TREATIES WITH THE UNITED STATES
GOVERNMENT 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 ALTERNATE CALCULATION
OF THE EFFECTIVE RATE OF TAX IMPOSED IN THE AGGREGATE ON THE AMOUNTS
RECEIVED BY THE RELATED MEMBER ALTERNATIVE TO THE EFFECTIVE TAX RATE
REQUIREMENT OF SUBSECTION (C)(3)(II)3 OF THIS SECTION IF:

(1) (I) THE RELATED MEMBER:

. (I) 1. IS SUBJECT IN ANOTHER STATE TO A TAX THAT IS
MEASURED BY GROSS RECEIPTS OR IS MEASURED BY NET CAPITAL OR NET WORTH;

AND

(II) 2. IS NOT SUBJECT IN THAT STATE TO A TAX MEASURED BY
NET INCOME OR RECEIPTS; OR

(2) (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 WHERE THE MEASURE
OF THE TAX INCLUDES THE PAYMENT TO DEMONSTRATE THAT SATISFY THE
REQUIREMENTS OF SUBSECTION (C)(3)(II) OF THIS SECTION HAVE BEEN SATISFIED.

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