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Additional Guidance on the Oregon Corporate Activity Tax (CAT)

December 8, 2019 | By | No Comments

On May 16, 2019, Governor Kate Brown signed “The Student Success Act” that enacted Oregon’s Corporate Activity Tax (CAT) into law. The CAT rate of 0.57% will be applied to the net Oregon Commercial Activity.

Oregon gross receipts delivered to or benefit received in Oregon less:

  • the greater of
    • 35% of apportioned cost inputs or
    • 35% of apportioned cost of labor
  • $1,000,000 annual exemption.

There is still uncertainty with respect to the CAT. Some additional unofficial guidance has been released since the tax was enacted:

• Unitary* filing will be required regardless of business form
• It is likely that the federal attribution rules in determining the common ownership of unitary entities. (Lineal descendants are considered 1 person)
• At a high level, unitary is >50% common ownership AND either functional integration or same line of business
• The $1M annual exemption only applies once to a unitary group
• Registration is required annually for the tax when you reach $750,000 in gross Oregon commercial activity, regardless if they owe tax
• Estimated payments are not required until a business has actual tax liability
• The law does not prohibit taxpayers from passing the tax through to the customer

*The Student Success Act defines “Unitary” as a business enterprise in which there exists directly or indirectly between the members or parts of the enterprise a sharing or exchange of value as demonstrated by:

• Centralized management or a common executive force;
• Centralized administrative services or functions resulting in economies of scale; or
• Flow of goods, capital resources or services demonstrating functional integration.

“Unitary Business” may include a business enterprise the activities of which:

• Are in the same general line of business, such as manufacturing, wholesaling or retailing; or
• Constitute steps in a vertically integrated process, such as the steps involved in the production of natural resources, which might include exploration, mining, refining and Marketing.

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