Oregon Enacts New Corporate Activity Tax

Oregon recently passed a new Corporate Activity Tax (“CAT”), which became effective on January 1, 2020. The CAT impacts not only corporations, but most business entities that have a strong economic presence in the state of Oregon. This new tax is imposed on Oregon taxable commercial activity in excess of $1 million at a rate of 0.57%, plus a flat tax of $250. The CAT tax will be in addition to the state’s income tax. Businesses with Oregon commercial activity in excess of $750,000 have nexus for purposes of the CAT and must register online within thirty (30) days after reaching that threshold.

The tax is assessed on a calendar-year basis, with the first returns due April 15, 2021. Note that the sourcing rules pertaining to what constitutes Oregon commercial activity is based on a market-based sourcing rule, so taxpayers that have no presence in Oregon can still be subject to the CAT tax if they derive significant receipts from Oregon customers.