January 2012
Philadelphia City Council Acts to Make Philadelphia a More Business Friendly Environment
On November 14, 2011, Mayor Michael Nutter signed two bills into law that will reduce the cost of doing business in Philadelphia. The first bill, Number 110554, sponsored by Council members Bill Green and Maria Quinones Sanchez, amends the Philadelphia Business Privilege Tax (BPT) to reduce the tax burden associated with doing business in Philadelphia. The second bill, Number 110548-A, sponsored by Councilmember James F. Kenney, amends Title 19 of the Philadelphia Code to reduce the fees associated with doing business in Philadelphia for new and existing businesses.
Philadelphia’s BPT has two components, a tax on gross receipts and a tax on net income. Bill Number 110554 phases in an exemption from BPT on the first $100,000 of gross receipts and a proportionate share of net income for all businesses by 2016. Beginning in 2014, businesses may exclude their first $50,000 in receipts from BPT. This amount increases to $75,000 in 2015 and $100,000 in 2016 and years thereafter. Additionally, this bill phases in single sales factor apportionment starting in 2013, eliminates the planned phase out of the gross receipts tax component (rate to remain 1.415 mills), and extends the reduction of the net income tax component rate to 6% by 2023 instead of 2022 as follows:
| Tax Year |
Previous |
Now |
| 2014 |
6.40% |
6.43% |
| 2015 |
6.35% |
6.41% |
| 2016 |
6.30% |
6.39% |
| 2017 |
6.25% |
6.35% |
| 2018 |
6.20% |
6.30% |
| 2019 |
6.15% |
6.25% |
| 2020 |
6.10% |
6.20% |
| 2021 |
6.05% |
6.15% |
| 2022 |
6.00% |
6.10% |
| 2023 & thereafter |
6.00% |
6.00% |
Bill Number 110548-A provides all new businesses with a two-year BPT exemption and a waiver on all business-related license fees for the first two years of operation, provided that certain requirements to employ individuals that are subject to Philadelphia’s wage tax are met (3 full time employees for the first 18 months and at least six full time employees from the 19th month through the 24th month. All employees must work at least 60% of the time in the City of Philadelphia). New businesses are defined as those that were not subject to BPT during the five year period prior to 2012. This bill also eliminates the Business Privilege License Fee for all businesses starting January 1, 2014.
The ParenteBeard State and Local Services team is available to assist you with any questions or concerns you have related to the Philadelphia Business Privilege tax.
Frank Czekay, Principal
Frank.Czekay@ParenteBeard.com
215.557.2023
Dave Werner, Principal
Dave.Werner@ParenteBeard.com
717.846.7000
Brian Baccellieri, Manager
Brian.Baccellieri@ParenteBeard.com
215.557.2291 |
