PRINTER'S NO. 3076
No. 2288 Session of 1990
INTRODUCED BY McNALLY, WOGAN, TRELLO, JOHNSON, PISTELLA,
KOSINSKI, CAPPABIANCA, GIGLIOTTI, BATTISTO, HERMAN,
PRESSMANN, D. R. WRIGHT, TANGRETTI, PESCI, BELFANTI, TRICH,
CIVERA, JOSEPHS, SERAFINI, NAHILL, LAUGHLIN AND HAYDEN,
FEBRUARY 12, 1990
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 12, 1990
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," providing tax credits to certain taxpayers to
11 offset taxes due for income earned from certain qualified
12 export receipts.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
16 the Tax Reform Code of 1971, is amended by adding an article to
17 read:
18 ARTICLE XXI
19 EXPORT DEVELOPMENT TAX CREDIT
20 Section 2101. Short Title.--This article shall be known and
21 may be cited as the "Export Development Tax Credit Law."
1 Section 2102. Legislative Intent.--The General Assembly of
2 the Commonwealth of Pennsylvania hereby finds that:
3 (a) Whereas, businesses in Pennsylvania must compete with
4 businesses around the world; and
5 (b) Whereas, foreign producers of goods and services enjoy
6 substantial financial, technical and political support of their
7 governments and have succeeded in capturing an ever larger share
8 of United States markets; and
9 (c) Whereas, foreign competition has resulted in a net loss
10 of business and jobs in Pennsylvania; and
11 (d) Whereas, protectionist policies have proved ineffective
12 in restoring a balance of trade between the United States and
13 its trading partners; and
14 (e) Whereas, promotion and development of export sales by
15 Pennsylvania businesses are necessary to the economic security
16 of Pennsylvania; and
17 (f) Whereas, the sale of goods and services in foreign
18 countries requires a greater risk of money and other business
19 resources than the sale of goods and services to domestic
20 consumers;
21 (g) Therefore, the extraordinary investment required to
22 develop successful export markets warrants a preferential and
23 distinctive tax treatment of income derived from the export of
24 goods and services in the form of a tax credit for increases in
25 qualified export receipts.
26 Section 2103. Definitions.--The following words, terms and
27 phrases, when used in this article, shall have the meanings
28 ascribed to them in this section, except where the context
29 clearly indicates a different meaning:
30 "Export property." Property which is:
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1 (1) manufactured, produced, grown or extracted in this
2 Commonwealth; and
3 (2) held primarily for sale, lease or rental in the ordinary
4 course of trade or business for direct use, consumption or
5 disposition outside the United States.
6 "Qualified export receipt." Any of the following:
7 (1) Gross receipts from the sale, exchange or other
8 disposition of export property.
9 (2) Gross receipts from the lease or rental of export
10 property which is used by the lessee of such property outside
11 the United States.
12 (3) Gross receipts for services which are related and
13 subsidiary to any qualified sale, exchange, lease, rental or
14 other subsidiary to any qualified sale, exchange, lease, rental
15 or other disposition of export property by such corporation.
16 (4) Gross receipts from the sale, exchange or other
17 disposition of qualified export assets, other than export
18 property.
19 (5) Interest on an obligation which is a qualified export
20 asset.
21 (6) Gross receipts for engineering or architectural services
22 for construction projects located or proposed for location
23 outside the United States.
24 (7) Gross receipts for the performance of managerial
25 services in furtherance of the production of other qualified
26 export receipts.
27 Section 2104. Tax Credit.--A taxpayer who is subject to
28 taxation under Article III or IV may claim a credit under this
29 article to offset the tax which would be paid by the taxpayer on
30 the income earned from qualified export receipts which exceeds
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1 the taxpayer's qualified export receipts for an earlier tax
2 year.
3 Section 2105. Calculation, Amount and Allocation of Tax
4 Credit.--(a) The amount and calculation of the export
5 development tax credit shall be determined pursuant to rules and
6 regulations promulgated by the Department of Revenue in
7 consultation with the Department of Commerce.
8 (b) Revenues derived from the export development tax credit
9 shall be allocated by the Department of Commerce in accordance
10 with rules and regulations promulgated by it under this article.
11 Section 2106. Powers and Duties.--(a) The Secretary of
12 Revenue shall have the power and duty to:
13 (1) Publish rules and regulations that are necessary to
14 carry out the provisions of this article.
15 (2) Publish as a notice in the Pennsylvania Bulletin, no
16 later than January 1 of each year, forms upon which taxpayers
17 may apply for the credit authorized by this article.
18 (3) If necessary to conform with constitutional and
19 statutory requirements of a balanced budget, fix a total dollar
20 amount of tax credits to be granted in a tax year, formulas for
21 the allocation of credits among Article III taxpayers and
22 Article IV taxpayers and among different classifications of
23 businesses, and the manner by which the credits authorized by
24 this article shall be calculated.
25 (4) Furnish, in consultation with the Secretary of Commerce,
26 to the members of the General Assembly with the submission of
27 the Governor's budget the following information:
28 (i) The total amount of tax credits used by all taxpayers
29 pursuant to this article in the preceding fiscal year.
30 (ii) The amount of tax credits granted according to the
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1 classification of business as determined by the standard
2 industrial classification code.
3 (iii) The amount of tax credits applied to the personal
4 income tax and the corporate net income tax.
5 (iv) The total amount of tax credits to be available
6 pursuant to this article in the following fiscal year.
7 (v) The amount of employment, local and State tax revenues,
8 profits, capital investment, increases in export sales and
9 economic growth which may be attributed to the use of export
10 development tax credits in the preceding fiscal year.
11 (b) The Secretary of Commerce shall have the power and duty
12 to:
13 (1) Publish rules and regulations that are necessary to
14 carry out the provisions of this article.
15 (2) Consult with the Secretary of Revenue to prepare the
16 report required under subsection (a)(4).
17 Section 2107. Sunset.--No credit may be claimed pursuant to
18 this article more than sixty months after the beginning of the
19 first full calendar year in which this article takes effect.
20 Section 2. The provisions of this act shall apply to
21 qualified export receipts accruing after December 31, 1989.
22 Section 3. This act shall take effect immediately.
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