H.B. No. 5169 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, defining the conditions under which municipalities or local government entities can enter into such agreements with retailers or their affiliated groups. Specifically, it stipulates that these agreements must not only change the economic position of the retailer beyond just tax benefits but also require that the retailer has a substantial purpose for entering into the agreement that is unrelated to tax benefits.

Furthermore, the bill establishes that if the comptroller finds a municipality or local government entity in violation of these provisions, it will disregard the newly established place of business for sales tax purposes and revoke any sales tax permits associated with that location. This legislation aims to ensure that tax incentives are not misused and that there is a legitimate economic rationale for the relocation or establishment of businesses in municipalities. The act is set to take effect on September 1, 2025.

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