CHAPTER 355
CORPORATIONS - INCREASING RATES OF FRANCHISE TAXES
AN ACT TO AMEND CHAPTER 6, REVISED CODE OF DELAWARE, 1935, RELATING TO STATE REVENUE, AS AMENDED, BY INCREASING THE RATES OF FRANCHISE TAXES PAID BY CORPORATIONS AND BY INCREASING THE MAXIMUM AND MINIMUM AMOUNTS OF FRANCHISE TAXES THAT MAY BE PAID BY CORPORATIONS.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:
Section 1. That 98. Sec. 64. of Chapter 6, Revised Code of Delaware, 1935, be and the same is hereby amended by striking and deleting the said paragraph and by inserting in lieu thereof the following new paragraph, entitled 98. Sec. 64., as follows:
98. Sec. 64. RATES OF FRANCHISE TAXES:--On and after January 1st, 1951, all corporations accepting the provisions of the Constitution of the State of Delaware and coming under the provisions of the General Corporation Law of this State, and all corporations which have heretofore filed or may hereafter file a Certificate of Incorporation under the provisions of said corporation law, shall pay to the State Tax Department as an annual franchise tax whichever of the applicable amounts prescribed by paragraphs (1) or (2), hereinafter set forth, is the lesser:
(1) Where the authorized capital stock does not exceed two hundred and fifty shares, Five Dollars and Fifty Cents ($5.50); where the authorized capital stock exceeds two hundred and fifty shares but is not more than one thousand shares, Eleven Dollars ($11.00); where the authorized capital stock exceeds one thousand shares but is not more than three thousand shares, Twenty-two Dollars ($22.00); where the authorized capital stock exceeds three thousand shares but is not more than five thousand shares, Twenty-seven Dollars and Fifty Cents ($27.50); where the authorized capital stock exceeds five thousand shares but is not more than ten thousand shares, Fifty-five Dollars ($55.00), and the further sum of Twenty-seven Dollars and Fifty Cents ($27.50) on each ten thousand shares or part thereof.
(2) Five Dollars and Fifty Cents ($5.50), where the assumed no-par capital of the corporation, found in the manner hereinafter in this paragraph (2) provided, does not exceed Twenty-five Thousand Dollars ($25,000.00); Eleven Dollars ($11.00), where such assumed no-par capital exceeds Twenty-five Thousand Dollars ($25,000.00) but is not more than One Hundred Thousand Dollars ($100,000.00); Twenty-two Dollars ($22.00) where such assumed no-par capital exceeds One Hundred Thousand Dollars ($100,000.00) but is not more than Three Hundred Thousand Dollars ($300,000.00); Twenty-seven Dollars and Fifty Cents ($27.50), where such assumed no-par capital exceeds Three Hundred Thousand Dollars ($300,000.00) but is not more than Five Hundred Thousand Dollars ($500,000.00); Fifty-five Dollars ($55.00), where such assumed no-par capital exceeds Five Hundred Thousand Dollars ($500,000.00) but is not more than One Million Dollars ($1,000,000.00); and the further sum of Twenty-seven Dollars and Fifty Cents ($27.50) for each One Million Dollars ($1,000,000.00) or part thereof of such additional assumed no-par capital.
For the purpose of computing the tax in accordance with this paragraph (2), the corporation's assumed no-par capital, whenever the phrase "assumed no-par capital" is used in this paragraph (2), shall be found by multiplying the number of authorized shares of capital stock without par value by One Hundred Dollars ($100.00).
To the amount of tax attributable to the corporation's assumed no-par capital, computed as above prescribed, add One Hundred Ten Dollars ($110.00) for each One Million Dollars or fraction thereof in excess of One Million Dollars ($1,000,000.00) of an assumed par value capital, found by multiplying the number of authorized shares of capital stock having par value by the quotient resulting from dividing the amount of the total assets of the corporation, as shown in the manner hereinafter provided, by the total number of issued shares of all denominations and classes; provided, however, that if the said quotient shall be less than the par value of any denomination or class of authorized shares having par value, the number of the shares of each such class shall be multiplied by their par value for the purpose of ascertaining the assumed par value capital in respect of such shares and the number of authorized shares having a par value to be multiplied by such quotient, as aforesaid, shall be reduced by the number of such shares whose par value exceeds such quotient; and where, to determine such assumed par value capital, it is necessary to multiply a class or classes of shares by such quotient and also to multiply a class or classes of shares by the par value of the shares, the assumed par value capital of the corporation shall be the sum of the products of such multiplications. Whenever the amount of the assumed par value capital, computed as above prescribed, is less than One Million Dollars ($1,000,000.00), the amount of the tax attributable thereto shall be the amount that bears the same relation to One Hundred Ten Dollars ($110.00) that the amount of such assumed par value capital bears to One Million Dollars ($1,000,000.00).
Unless a corporation shall submit to the Secretary of State, at the time of filing its annual report as required by the next preceding Section of this Chapter, a statement under oath made by its President, a Vice-President, its Treasurer, or its Secretary, setting forth the amount of the total gross assets of the corporation, as of the nearest date on which such amount is obtainable, including in such statement its good will valued at the same amount at which it is valued in the books of account of the corporation, it shall pay a franchise tax for the current year computed in the manner prescribed by paragraph (1) of this Section.
In no case shall the tax on any corporation for a full taxable year, by whichever of the said paragraphs (1) or (2) the same is computed, be more than Fifty Thousand Dollars ($50,000.00) nor less than Five Dollars and Fifty Cents ($5.50).
In case the corporation has not been in existence during the whole year, the amount of tax due, at the foregoing rates and as above provided, shall be prorated for the portion of the year during which the corporation was in existence.
In case a corporation shall have changed during the taxable year the amount of its authorized capital stock, the total annual franchise tax payable at the foregoing rates shall be arrived at by adding together the franchise taxes calculated as above set forth as prorated for the several periods of the year during which each distinct authorized amount of capital was in effect.
Every corporation which shall show by a supplemental affidavit attached to its annual report, duly sworn to by its President and Secretary or Treasurer, or two of its Directors, or any two of its incorporators if directors or officers have not been elected, that it has not been engaged in any of the business activities for which it was granted a Certificate of Incorporation shall pay only at the rate of one-half of the amount of taxes scheduled above for such portion of the year as it shall not have been so engaged and at the full rate for the remainder of the year. Any such affidavit shall state fully the pertinent facts upon which the claim for one-half rate is based.
For the purpose of computing the taxes imposed by this Section, the authorized capital stock of a corporation shall be considered to be the total number of shares which the corporation is authorized to issue, whether or not the number of shares that may be outstanding at any one time be limited to a less number.
Provided, however, that all corporations as herein defined which are regulated investment companies as defined by Section 170 of the Act of Congress commonly called "The Revenue Act of 1942" as now existing or as hereafter amended, shall pay to the State Tax Department as an annual franchise tax, a tax computed either under paragraph (1) hereof, or a tax computed under paragraph (2) hereof, or a tax at the rate of One Hundred Sixty-five Dollars ($165.00) per annum for each One Million Dollars, or fraction thereof in excess of One Million Dollars ($1,000,000.00), of the average gross assets thereof during the taxable year, whichever be the least. Said average assets for the purposes of this Section shall be taken to be the mean of the gross assets on January 1 and December 31 of the taxable year. Any corporation electing to pay a tax under this proviso shall submit to the Secretary of State at the time of filing its annual report as required by the next preceding Section of this Chapter, a statement under oath made by its President, a Vice-President, its Treasurer or Secretary, certifying that such corporation is a regulated investment company as above defined, and stating the amount of its assets on January 1 and December 31 of the taxable year, 'and the mean thereof. The Secretary of State may investigate the facts set forth in said statement under oath and if it should be found that said corporation so electing to pay under said proviso shall not be a regulated investment company, as above defined, shall assess upon such corporation a tax under paragraphs (1) or (2) hereof, whichever be the lesser.
Approved June 15, 1951.