HOUSE BILL REPORT

SSB 5106

BYSenate Committee on Economic Development & Labor (originally sponsored by Senators Smitherman, Lee, Warnke, Williams and McMullen)

Developing a model shared foreign sales corporation.

House Committe on Trade & Economic Development

Majority Report:  Do pass with amendment.  (12)

      Signed by Representatives Cantwell, Chair; Wineberry, Vice Chair; G. Fisher; Kremen, Moyer, Rasmussen, Raiter, Rector, Schoon, Tate, Walk and Youngsman.

House Staff:Bill Lynch (786-7092)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

MARCH 28, 1989

BACKGROUND:

Increasing exports of Washington products offer a way to improve the performance of the Washington economy and increase state revenues.  Foreign sales corporations represent the only major federal tax incentive for exporters.  The tax benefit amounts to a 15 percent reduction in corporate taxes on exports.  A shared foreign sales corporation allows 25 or fewer small and medium sized exporters to take advantage of the tax benefits by becoming shareholders in a corporation established in a qualifying foreign country.  Each exporter-shareholder of a shared foreign sales corporation owns a separate class of stock and operates its own export business as usual. 

SUMMARY:

BILL AS AMENDED:  The Department of Trade and Economic Development develops a model shared foreign sales corporation.  The department makes all legal, financial and accounting arrangements necessary for the formation of the model shared foreign sales corporation.  The model is made available for potential use by small businesses with 250 or fewer employees.  The department charges back the startup costs to the exporter shareholders of the model corporation.  The appropriation is $25,000 for the development of the model corporation.

AMENDED BILL COMPARED TO SUBSTITUTE:  The reference to the Business Assistance Center is deleted.

Appropriation:    $25,000 from the General Fund to the Department of Trade and Economic Development.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Senator Bill Smitherman, Prime Sponsor; and Don White, Washington Public Ports Association.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    This will allow small companies to take advantage of federal tax incentives for exporting.

House Committee - Testimony Against:      None Presented.