MS HB1599

Expands Mississippi income tax to nonresidents on net income derived from property, activity, or other sources within Mississippi, effective January 1, 2017.

Revises definition of "doing business" to include regular solicitation of business from potential customers in Mississippi, issuance of credit/debit cards to Mississippi customers, performance of services outside Mississippi with benefits received in-state, franchising/licensing agreements, and intangible personal property transactions.

Establishes phased elimination of the first $5,000 income tax exemption for residents between 2018-2022, with full exemption implemented by 2022 on first $5,000 of taxable income.

Adds definition of "valid business purpose" as business motivation that improves the taxpayer's economic position apart from tax effects, and restricts deductions for intangible expenses and interest paid to related members unless the transaction has valid business purpose, economic substance, and arm's-length terms.

Modifies allocation rules for service income to be apportioned to the state where benefits of services are received, and expands what constitutes business income under functional and transactional tests.