Arizona – New Commercial Lease Exemption Enacted

SALT Report 2351 – The Arizona State Legislature passed a bill that provides a municipal transaction privilege tax (TPT) exemption for the leasing of real property between affiliated companies, businesses, persons, or reciprocal insurers.

House Bill 2324 Provisions

    • Excludes from the commercial lease classification under state TPT the leasing of real property between affiliated companies, businesses, persons, or reciprocal insurers,
    • Excludes from the current municipal tax exemption for leases between affiliated corporations to mirror the broadened state-level exemption
    • Specifies that “affiliated companies, businesses, persons, or reciprocal insurers” means the lessor holds a controlling interest in the lessee, the lessee holds a controlling interest in the lessor, an affiliated entity holds a controlling interest in both the lessor and the lessee, or an unrelated person holds a controlling interest in both the lessor and lessee,
    • Defines “controlling interest” as direct or indirect ownership of at least 80% of the voting shares of a corporation or of the interests in a company, business, or person other than a corporation, and
    • Defines “reciprocal insurer” as an unincorporated aggregation of subscribers operating individually and collectively through an attorney-in-fact to provide reciprocal insurance among themselves,

House Bill 2324 was signed by the Governor on April 3, 2013 and will be effective 91 days after final adjournment of the 2013 Legislature

For Further Information

Arizona State Legislature – House Bill 2324, Laws 2013