Senate Bill No. 2747 introduces new regulations regarding agreements that provide for rebates of municipal sales and use taxes or grants and loans based on those taxes. The bill adds Section 321.006 to the Tax Code, which defines the terms and conditions under which municipalities or local government entities can enter into such agreements with retailers or their affiliated groups. Specifically, it outlines that these agreements must involve the relocation or establishment of a business in the municipality and must not solely benefit the retailer through tax incentives. Instead, the retailer must demonstrate a substantial purpose for entering into the agreement beyond just obtaining tax benefits.

Furthermore, the bill stipulates that if the Comptroller finds a municipality or local government entity in violation of these provisions, they will disregard the new place of business when determining the location of taxable sales and may revoke any sales tax permits issued for that location. This legislation aims to ensure that economic incentives provided by municipalities lead to genuine economic development rather than merely shifting tax revenues without real benefits to the community. The act is set to take effect on September 1, 2025.

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