During the 1998 regular session, the Connecticut General Assembly approved exemption from the corporation business tax for any non-U.S. corporation whose sole activity in Connecticut during the income year consisted of trading in stocks or securities for such corporation's own account. This provision was intended to take advantage of the repeal by Congress last year of the requirement that in order to avoid U.S. taxation, the principal office of such foreign corporation must be located outside the United States. See Internal Revenue Code section 864(b)(2).
Public Act 98-1 (June Special Session), signed by Gov. John Rowland (R) on July 1, clarifies that this exemption also applies to the trading in commodities by such non-U.S. corporation in Connecticut for its own account. The original exemption for such foreign investment corporations was effective for income years commencing on or after January 1, 1998, and the "clarification" regarding commodities is effective on or after July 1, 1998.
Reprinted with permission from the July 13, 1998 issue of State Tax Notes.