CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX …

1 (Rev. 08/01) i CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS TABLE OF CONTENTS INDEX .. 56-57 GENERAL PROVISIONS .. 1 Section 101. Definitions .. 1 Section 102. To Whom The Ordinance Applies .. 5 Section 103. What Constitutes Doing BUSINESS .. 5 Section 104. Complete Termination or Liquidation of a BUSINESS .. 10 RETURNS .. 14 Section 201. Who Must File a Return ..14 Section 202. Due Date For Filing Returns .. 14 Section 203. Period Used In Computing 15 Section 204. Consolidated Returns .. 17 Section 205. Change of Reported Net Income by Federal Government .. 17 TAX ON 18 Section 301.

2 Definition of Receipts .. 18 Section 302. Exclusion from Receipts ..18 Section 303. Receipts from Rental or License of Tangible Personal Property .. 22 Section 304. Taxability of Receipts from Sales of Tangible Personal Property .. 23 Section 305. Alternative Receipts Tax Computation .. 24 Section 306. Receipts from Government Agencies and Non-Profit Organizations .. 26 Section 307. Conditional and Installment 26 Section 308. Consignment Transactions .. 26 Section 309. Leased 27 Section 310. Persons Engaged in Professions or Vocations or in Rendering Personal Services.

3 27 Section 311. Principal and Agent .. 27 Section 312. Persons Erecting Buildings or Otherwise Altering, Repairing or Improving Property .. 28 Section 313. Contractors Performing Long-Term Building or Construction Contracts .. 29 Section 314. Contractors Who Repair, Alter and Improve Tangible Personal Property .. 29 Section 315. Real Estate .. 29 Section 316. Buildings, Hotels, Apartment Houses, Boarding Houses, Nursing Homes, Etc.

4 30 Section 317. Insurance Companies .. 30 Section 318. Insurance Agents, Brokers and Underwriters .. 30 Section 319. Theaters and Motion Picture Houses .. 31 (Rev. 08/01) ii CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS TABLE OF CONTENTS Section 320. Dividends .. 31 Section 321. Interest .. 32 Section 322. Royalties .. 32 Section 323. Receipts from Securities Transactions .. 32 Section 324. Sale of Capital 33 Section 325. Proceeds from Insurance Policies .. 34 Section 326. Persons Registered Under the Act of December 5, 1972 P. L. 1280 (Known as the Pennsylvania Securities Act of 1972), Referred to in this Section as Securities Dealers.

5 34 Section 327. Apportionment .. 35 TAX ON NET 36 Section 401. Irrevocable Election of Net Income Computation Method .. 36 Section 402. Corporations Participating in the Filing of a Consolidated Return .. 36 Section 403. Net Income Method I .. 36 Section 404. Net Income Method II .. 37 Section 405. Division of 41 Section 406. Allocation of Non BUSINESS Income .. 42 Section 407. Computation of Taxable Net Income or Loss .. 43 Section 408. Apportionment of Income by All Persons Other Than Persons Who are Subject to a Tax Pursuant to Articles VII (Bank Shares Tax), VIII (Title Insurance and Trust Companies Shares Tax), IX (Insurance Premiums Tax) or XV (Mutual Thrift Institutions Tax) of The Tax Reform Code of 1971, and Private Banks.

6 44 Section 409. Recomputation of Taxable Net Income or Loss by Persons Registered Under the Pennsylvania Securities Act of 1972, Who Elect to Report Taxable Net Income Under Method II (Section 404) .. 53 Section 410. Apportionment of Income by All Persons Who are Subject to a Tax Pursuant to Articles VII (Bank Shares Tax) VIII (Title Insurance and Trust Companies Shares Tax), IX (Insurance Premiums Tax) or XV (Mutual Thrift Institutions Tax) of the Tax Reform Code of 1971, and Private Banks .. 54 Section 411. Net Operating Losses .. 55 (Rev. 08/01) 1 CITY OF PHILADELPHIA BUSINESS PRIVILEGE TAX REGULATIONS SECTION 101.

7 DEFINITIONS. The following words and phrases, when used in these Regulations, have the meanings ascribed to them in this section, except where the contents clearly indicate another or a different meaning. A. "Affiliated group." One or more chains of corporations connected through stock ownership with a common parent corporation if: (1) Stock possessing at least eighty (80%) percent of the voting power of all classes of stock and at least eighty (80%) percent of each class of the nonvoting stock of each corporation, except the common parent corporation, is owned directly by one or more of the other corporations. (2) The common parent corporation owns directly stock possessing at least eighty (80%) percent of the voting power of all classes of stock and at least eighty (80%) percent of each class of the nonvoting stock of at least one of the other corporations.

8 As used in this definition, "stock" does not include non-voting stock which is limited and preferred as to dividends. B. "Allocation." The assignment of nonbusiness income (or losses) within or without the City of PHILADELPHIA . C. "Apportionment." The process of assigning receipts or BUSINESS income (or losses) within and without the City of PHILADELPHIA by the use of a formula containing one or more apportionment factors. D. " BUSINESS ." Carrying on or exercising for gain or profit within PHILADELPHIA any trade, BUSINESS , including financial BUSINESS as hereinafter defined, profession, vocation or commercial activity or making sales to persons within the City of PHILADELPHIA .

9 " BUSINESS " shall not include the following: 1. Those activities conducted by a nonprofit corporation or association organized for religious, charitable or educational purposes, if such activities are directly related to its religious, charitable or educational purposes. 2. The BUSINESS of any political subdivision, or of any authority created and organized under and pursuant to law of this Commonwealth. 3. The specific BUSINESS conducted by any public utility operating under the laws, rules and regulations administered by the Pennsylvania Public Utility Commission or conducted by a BUSINESS subject to the jurisdiction of the Interstate Commerce Commission of furnishing or supplying service or services at the rates specified in its tariffs.

10 4. The BUSINESS of any insurance company, association or exchange, or any fraternal, benefit or beneficial society of any other state under the laws of which insurance companies, (Rev. 08/01) 2 associations or exchanges or fraternal, benefit or beneficial societies of Pennsylvania doing BUSINESS in such other state are subjected, by reason of the tax imposed by the ordinance, to additional or further taxes, fines, penalties or license fees by such other state. 5. Any employment for a wage or salary. 6. Credit Unions chartered by the Govt. or the Comm. of Pa. 7. The BUSINESS of loading or discharging cargo to or from vessels when conducted on piers, wharves or marine terminal facilities in the Port of PHILADELPHIA and related BUSINESS activities conducted on such premises such as furnishing dockage, wharfage, truck and/or railroad car loading and unloading, and storage of cargo which is to be loaded onto or has been discharged from vessels at a pier, wharf or marine terminal facility in the Port of PHILADELPHIA .