Ohio Enacts Major Reform of Taxes on Financial Institutions
Today, December 20, 2012, Governor John Kasich signed into law Amended Substitute House Bill 510. The Ohio Senate recently approved the bill which replaces the existing franchise tax on a financial institution's net worth with a new franchise tax imposed at the parent holding company level for typical financial institution groups ("Financial Institution Tax"). The bill also repeals the Dealer in Intangibles ("Dealer") Tax on an entity's net worth and instead taxes such entities within the Commercial Activity Tax ("CAT") regime. The new financial institution tax will be imposed starting with the 2014 tax year (based on equity capital at December 31, 2013) and the Dealer provisions go into effect during 2013. These provisions were based on the Governor's proposals with some modifications and received widespread support throughout the financial services industry.