The bill amends the Income Tax Act of 1967, specifically section 623, to clarify the imposition of a corporate income tax on taxpayers engaged in business activities within Michigan. The corporate income tax is set at a rate of 6.0% on the corporate income tax base, which is defined as a taxpayer's business income subject to various adjustments. Notable adjustments include the addition of interest income and dividends from out-of-state obligations, taxes on net income, and carrybacks or carryovers of net operating losses. The bill also specifies conditions under which certain expenses, such as royalties and interest paid to related parties, may be excluded from the tax base if they meet specific criteria.

Additionally, the bill introduces provisions for "specified outsourcing expenses," which allows taxpayers to add back eligible expenses related to the elimination or relocation of business operations previously located in Michigan. It also clarifies the treatment of business losses, allowing for deductions of losses incurred after December 31, 2011, and specifies that these losses can be carried forward for up to ten years. The language changes include the replacement of "which" with "that" in reference to foreign nations with income tax treaties and the introduction of definitions for eligible and specified outsourcing expenses.

Statutes affected:
House Introduced Bill: 206.623