SENATE BILL NO. 162
AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE BY PROVIDING FOR THE EXEMPTION OF FOREIGN SALES CORPORATIONS AND FOREIGN SALES SERVICE CORPORATIONS FROM THE PROVISIONS OF THE CORPORATION INCOME TAX AND BY PROVIDING FOR THE APPLICATION OF OCCUPATIONAL AND BUSINESS LICENSES AND FEES FOR SUCH CORPORATIONS, AND BY PROVIDING FOR THE EXEMPTION FOR SMALL FOREIGN SALES CORPORATIONS FROM SUCH LICENSES AND FEES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. This Act may be referred to as "The International Trade Act of Delaware".
Section 2. Amend 91902(b), Chapter 19, Title 30, Delaware Code, by adding new subparagraphs (U) and (12) to read as follows:
"(11) A corporation which qualifies as a Foreign Sales Corporation (FSC) under the provisions of subchapter N of Chapter I of the Federal Internal Revenue Code and which has in effect for the entire taxable year a valid election under Federal law to be treated as a FSC and has and remains qualified under the provisions of subparagraphs (I) through (111) of paragraph 12 hereof.
(12) A corporation which has as its primary purpose the provision of services to a foreign sales corporation(s) (FSC) as described in subparagraph (U) above, and which meets the following quallficatioru for exemption from taxation under this chapter, hereinafter referred to as a Foreign Sales Service Corporation (FSSC):
(I) The FSC or FSSC must maintain, by itself or through an agent or a person under contract, an office within this State; and
(U) The FSC, by itself or through an agent or a person under contract or FSSC on behalf of a FSC, has participated within this State in the solicitation (other than advertising) or the negotiation or the making of the contract for a FSC(s) derived from one or more transactions for the taxable year; and
(ill) The FSC or FSSC shall file, under rules and regulations prescribed by the Secretary of Finance, an information return stating its Intention to qualify as a FSC or FSSC and an annual information return verifying compliance with the FSC or FSSC qualification rules for exemption.
The Secretary of Finance shall, on or before April IS of each year. beginning April 15, 1986, make an annual report to the Governor and General Assembly of this State as to the revenue collected from and employment created by ail FSC(s) and FSSC(s) qualifying or previously qualified under the rules and regulations prescribed by the Secretary of Finance.
A corporation shall be deemed to have as its primary purpose the provision of services to a FSC(s) if 80% or more of its gross receipts for the taxable year. as defined in 9230I(e), Chapter 23 of this Title, are derived from a FSC(s). An office as used in this subparagraph shall mean a place for the transaction of business. Any other terms used in this subparagraph shall have the same meaning as were used In a comparable context in the provisions of the Internal Revenue Code of 1954 and amendments thereto."
Section 3. Amend 92301. Chapter 23. Title 30 of the Delaware Code by adding a subparagraph (89) to subsection (a) as follows:
"(89) Foreign Sales Corporation (FSC), ;100. 'Foreign Sales Corporation' includes every corporation engaged in business as a foreign sales corporation (FSC) as defined in 91902(b) of this Title except a Small FSC as defined In 9922(b), subchapter N of Chapter 1 of the Federal Internal Revenue Code."
Section 4. Amend 92301. Chapter 23. Title 30 of the Delaware Code by adding a subparagraph (90) to subsection (a) as follows:
"(90) Foreign Sales Service Corporation (FSSC), ;100. 'Foreign Sales Service Corporation' includes every corporation engaged in business as a foreign sales service corporation (FSSC) as defined in 91902(b) of this Title."
"(q) A Foreign Sales Corporation (FSC) as defined in §1902(b) of this Title, shall be exempt from payment of fees as set forth in subsection (d) this section."
Section 6. This Act shall become effective for taxable years beginning after December 31, 1984.
Approved July 12, 1985.