On May 16, 2019, Governor Brown signed Oregon’s new gross receipts tax (the “Oregon CAT”) into law. 2019 Or Laws Ch. 122 (HB 3427). Although modeled on the Ohio commercial activity tax (the “Ohio CAT”), the Oregon CAT includes a substantial expense deduction. The tax is effective for tax years beginning on or after January 1, 2020.
The tax is a 0.57 percent gross receipts tax that generally applies to all businesses with Oregon-source receipts over $1 million. In computing their taxable receipts, taxpayers may generally subtract the greater of (i) cost inputs (cost of goods sold), or (ii) labor costs.
The Oregon CAT statute contains a number of material provisions that are vague or susceptible to a variety of interpretations. Affected taxpayers may seek clarification through either legislation or the administrative rulemaking process.
If you would like to know more about the proposed tax, how it might affect your business, or options to plan for it, please contact one of our Oregon tax partners: John Gadon(503.778.2130) or Eric Kodesch (503.778.2107).
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