AN ACT
Relating to business and occupation tax of international investment management
companies; amending RCW 82.04.2201 and 82.04.290; adding a new section to
chapter 82.04 RCW; providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. A new
section is added to chapter 82.04 RCW to read as follows:
For
purposes of RCW 82.04.290(3):
(1) A
person is engaged in the business of providing international investment
management services, if:
(a)
Such person is engaged primarily in the business of providing investment
management services; and
(b) At
least ten percent of the gross income of such person is derived from providing
investment management services to any of the following: (i) Persons or
collective investment funds residing outside the United States; or (ii) persons
or collective investment funds with at least ten percent of their investments
located outside the United States.
(2)
"Investment management services" means investment research,
investment consulting, portfolio management, fund administration, fund
distribution, investment transactions, or related investment services.
(3)
"Collective investment fund" includes:
(a) A
mutual fund or other regulated investment company, as defined in section 851(a)
of the internal revenue code of 1986, as amended;
(b) An
"investment company," as that term is used in section 3(a) of the
Investment Company Act of 1940, as well as any entity that would be an
investment company for this purpose but for the exemptions contained in section
3(c)(1) or (11);
(c) An
"employee benefit plan," which includes any plan, trust, commingled
employee benefit trust, or custodial arrangement that is subject to the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. Sec.
1001 et seq., or that is described in sections 125, 401, 403, 408, 457, and
501(c)(9) and (17) through (23) of the internal revenue code of 1986, as
amended, or a similar plan maintained by a state or local government, or a
plan, trust, or custodial arrangement established to self-insure benefits
required by federal, state, or local law;
(d) A
fund maintained by a tax-exempt organization, as defined in section 501(c)(3)
of the internal revenue code of 1986, as amended, for operating,
quasi-endowment, or endowment purposes;
(e)
Funds that are established for the benefit of such tax-exempt organizations,
such as charitable remainder trusts, charitable lead trusts, charitable annuity
trusts, or other similar trusts; or
(f)
Collective investment funds similar to those described in (a) through (e) of
this subsection created under the laws of a foreign jurisdiction.
(4)
Investments are located outside the United States if the underlying assets in
which the investment constitutes a beneficial interest reside or are created,
issued or held outside the United States.
Sec.
2. RCW
82.04.2201 and 1994 sp.s. c 10 s 1 are each amended to read as follows:
There
is levied and shall be collected for the period July 1, 1993, through June 30,
1997, from every person for the act or privilege of engaging in business
activities, as a part of the tax imposed under RCW 82.04.220 through 82.04.280
and 82.04.290 (3) and (4), except RCW 82.04.250(1) and 82.04.260(15), an
additional tax equal to 4.5 percent multiplied by the tax payable under those
sections.
To
facilitate collection of these additional taxes, the department of revenue is
authorized to adjust the basic rates of persons to which this section applies
in such manner as to reflect the amount to the nearest one-thousandth of one
percent of the additional tax hereby imposed, adjusting ten-thousandths equal
to or greater than five ten-thousandths to the greater thousandth.
Sec.
3. RCW
82.04.290 and 1993 sp.s. c 25 s 203 are each amended to read as follows:
(1)
Upon every person engaging within this state in the business of providing
selected business services other than or in addition to those enumerated in RCW
82.04.250 or 82.04.270; as to such persons the amount of tax on account of such
activities shall be equal to the gross income of the business multiplied by the
rate of 2.5 percent.
(2)
Upon every person engaging within this state in banking, loan, security,
investment management, investment advisory, or other financial businesses,
other than or in addition to those enumerated in subsection (3) of this section;
as to such persons, the amount of the tax with respect to such business shall
be equal to the gross income of the business, multiplied by the rate of 1.70
percent.
(3) Upon
every person engaging within this state in the business of providing
international investment management services, as to such persons, the amount of
tax with respect to such business shall be equal to the gross income or gross
proceeds of sales of the business multiplied by a rate of 0.275 percent.
(4)
Upon every person engaging within this state in any business activity other
than or in addition to those enumerated in RCW 82.04.230, 82.04.240, 82.04.250,
82.04.255, 82.04.260, 82.04.270, and 82.04.280, and subsections (1) ((and)),
(2), and (3) of this section; as to such persons the amount of tax on
account of such activities shall be equal to the gross income of the business
multiplied by the rate of 2.0 percent. This section includes, among others,
and without limiting the scope hereof (whether or not title to materials used
in the performance of such business passes to another by accession, confusion
or other than by outright sale), persons engaged in the business of rendering
any type of service which does not constitute a "sale at retail" or a
"sale at wholesale." The value of advertising, demonstration, and
promotional supplies and materials furnished to an agent by his principal or
supplier to be used for informational, educational and promotional purposes
shall not be considered a part of the agent's remuneration or commission and
shall not be subject to taxation under this section.
NEW SECTION. Sec. 4. This act
is necessary for the immediate preservation of the public peace, health, or
safety, or support of the state government and its existing public
institutions, and shall take effect July 1, 1995.
