Minnesota Targets Corporations Shifting Profits to Tax Havens

Multinational corporations paying income taxes in Minnesota would be required to add foreign subsidiaries’ profits to their state returns under a historic tax overhaul bill moving quickly through the state Legislature.

Lawmakers are expected to act on omnibus tax legislation that includes a bold plan to shift Minnesota to mandatory worldwide combined reporting for the calculation of corporate income taxes. The action would make Minnesota the only state to abandon so-called “water’s edge” rules, which permit businesses to exclude foreign affiliates’ income from the combined group when they file their state income tax returns.

Minnesota’s proposed law, which has broad ...