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(a) "Gross receipts" means the total amounts received or accrued by a person from whatever source derived, including, but not limited to, amounts derived from sales, services, dealings in property, interest, rent, royalties, dividends, licensing fees, other fees, commissions and distributed amounts from other business entities. Except as otherwise specifically provided in this Article, gross receipts includes but is not limited to all amounts that constitute gross income for federal income tax purposes. Except as otherwise specifically provided in this Article, gross receipts includes all receipts, cash, credits and property of any kind or nature and including any amount for which credit is allowed by the seller to the purchaser, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, losses or any other expense whatsoever, except that cash discounts allowed or taken on sales shall not be included as gross receipts. Gross receipts, including advance payments, shall be included in a taxpayer's gross receipts at the time such receipts are recognized as gross income for federal income tax reporting purposes.
(b) "Gross receipts" with respect to any lease or rental shall include payment for any services that are part of the lease or rental, whether received in money or otherwise, that are paid to, on behalf of, or for the benefit of, the lessor, and all receipts, cash, credits, property of any kind or character and the fair market value of services so paid or rendered by the lessee.
(c) Treatment of Taxes. "Gross receipts" shall not include the amount of any federal, state, or local tax imposed on or with respect to retail sales whether imposed upon the retailer or upon the purchaser and regardless of whether the amount of tax is stated as a separate charge, or such part of the sales price of any property previously sold and returned by the purchaser to the seller which is refunded by the seller by way of cash or credit allowances given or taken as part payment on any property so accepted for resale. Gross receipts shall also not include any federal, state or local tax imposed upon a person for which that person is reimbursed by means of a separately stated charge to a purchaser, lessee, licensee or customer. Gross receipts shall not include any amount of third-party taxes that a taxpayer collects from or on behalf of the taxpayer's customers and remits to the appropriate governmental entity imposing such tax. Gross receipts shall not include any tax refunds received by a person from a governmental entity. Gross receipts shall include any federal, state or local tax not specifically excluded in this subsection.
(d) "Gross receipts" shall not include any amount received from or charged to any person that is a related entity to the taxpayer. Nor shall gross receipts include any grants received from governmental entities or any gifts. Gross receipts shall not include any investment receipts. "Investment receipts" includes interest, dividends, capital gains, other amounts received on account of financial instruments, and distributions from business entities, provided such items are directly derived exclusively from the investment of capital and not from the sale of property other than financial instruments, or from the provision of services, to any person. Gross receipts also shall not include any allocations of income or gain, or distributions (such as dividends, interest and other returns on capital) from an entity treated as a pass-through entity for federal income tax purposes, provided such allocations or distributions are derived exclusively from an investment in such entity, and not from any other property sold to, or services provided to, such entity. Any gross receipts of a pass-through entity which is subject to the gross receipts tax shall not also constitute gross receipts of any owner of that entity.
(e) Notwithstanding the provisions of subsection (a), "gross receipts" from the sale or exchange of stocks or other similar written instruments evidencing a right to participate in the assets of any business, or of bonds or other evidence of indebtedness, or of any other marketable securities (collectively referred to in this Article as "financial instruments"), or of any real property, shall not include the cost to acquire the financial instrument(s), or real property, sold or otherwise exchanged or converted. Nor shall "gross receipts" include the amount received by the original issuer of a financial instrument in exchange for such issuance. To the extent that any loss on the sale or exchange of financial instruments reduces the gross income of a person for federal income tax purposes in the year the loss is incurred, that loss shall reduce gross receipts from the sale or exchange of financial instruments, but in no event shall those receipts be less than zero, and in no event may any such loss be carried back or carried forward to reduce gross receipts in a tax year other than that in which the loss was incurred.
(f) No person shall be deemed to be engaging in business in the City if that person is an individual whose only gross receipts within the City are derived from investments of that individual's own funds in financial instruments. Gross receipts of an individual shall not include interest, dividends, capital gains and similar items or investment income earned from the investment of that individual's own capital.
(g) For purposes of this Article and Article 12, and notwithstanding Section 6.2-12 of Article 6, no person shall be deemed to be engaging in business within the City if its activities in the City consist solely of one or more of the following:
(1) contracting with, acting through, or otherwise using the services of, any investment advisor or affiliate thereof which is not a related entity;
(2) maintaining documents of formation, incorporation, or registration within the City;
(3) being an owner, member, or other participant in an entity engaging in business within the City which is a pass-through entity for federal income tax purposes; or
(4) having trustees or directors who meet or reside within the City.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
"NAICS code" means the numerical classification for business activities established in the North American Industry Classification System used by federal governmental agencies to classify business establishments; references in this Article to particular numerical NAICS codes are intended to apply the definitions and descriptions adopted in that system as of the effective date of this Article.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
A person is a "related entity" to a taxpayer if that person and the taxpayer are permitted or required by the California Franchise Tax Board under Section 25102 et seq. of the California Revenue and Taxation Code, or any successor, to have their income reflected on the same combined report. For purposes of this Article, if two or more persons derive gross receipts solely from sources within California, and their business activities are such that, if conducted both within and outside California, a combined report would be required under the California Revenue and Taxation Code, or any successor, then those persons are related entities regardless of whether they file a combined report under the California Revenue and Taxation Code, or successor.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
"Sale" and "sell" mean the making of any transfer of title, in any manner or by any means whatsoever, to property for a price, and to the serving, supplying or furnishing, for a price, of any property fabricated or made at the special order of consumers who do or who do not furnish directly or indirectly the specifications or materials therefor. A transaction whereby the possession of property is transferred but the seller retains the title as a security for the payment of the price shall likewise be deemed a sale.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014)
(a) Except as otherwise provided under this Article 12-A-1
, the City imposes and every person engaging in business within the City shall pay an annual gross receipts tax measured by the person's gross receipts from all taxable business activities attributable to the City. A person's liability for the gross receipts tax shall be calculated according to Sections 953.1 through 953.7.
(b) The gross receipts tax is a privilege tax imposed upon persons engaging in business within the City for the privilege of engaging in a business or occupation in the City. The gross receipts tax is imposed for general governmental purposes. Proceeds from the tax shall be deposited in the City's general fund and may be expended for any purposes of the City.
(c) The voters intend by adopting this measure to authorize application of the gross receipts tax in the broadest manner consistent with the provisions of this Article 12-A-1
and the requirements of the California Constitution, the United States Constitution, and any other applicable provision of federal and state law.
(d)
The tax on Administrative Office Business Activities imposed by Section 953.8 is intended as a complementary tax to the gross receipts tax, and shall be considered a gross receipts tax for purposes of this Article 12-A-1.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Proposition F, 11/3/2020, Eff. 12/29/2020, Oper. 1/1/2021)
(a)
The gross receipts tax rates applicable to the business activities of retail trade, wholesale trade, and certain services are:
(1) For tax years beginning on or after January 1, 2018 and ending on or before December 31, 2020:
0.075% (e.g., $0.75 per $1,000) for gross receipts between $0 and $1,000,000
0.1% (e.g., $1 per $1,000) for gross receipts between $1,000,001 and $2,500,000
0.135% (e.g., $1.35 per $1,000) for gross receipts between $2,500,001 and $25,000,000
0.16% (e.g., $1.60 per $1,000) for gross receipts over $25,000,000
(2) For the business activities of retail trade and certain services:
(A) For tax years 2021 through and including 2024:
0.053% (e.g., $0.53 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.07% (e.g., $0.70 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.095% (e.g., $0.95 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.224% (e.g., $2.24 per $1,000) for taxable gross receipts over $25,000,000
(B) For tax year 2025:
0.079% (e.g., $0.79 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.105% (e.g., $1.05 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.142% (e.g., $1.42 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.224% (e.g., $2.24 per $1,000) for taxable gross receipts over $25,000,000
(C) For tax years beginning on or after January 1, 2026:
0.105% (e.g., $1.05 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.14% (e.g., $1.40 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.189% (e.g., $1.89 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.224% (e.g., $2.24 per $1,000) for taxable gross receipts over $25,000,000
(3) For the business activity of wholesale trade for tax years beginning on or after January 1, 2021:
0.105% (e.g., $1.05 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.14% (e.g., $1.40 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.189% (e.g., $1.89 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.224% (e.g., $2.24 per $1,000) for taxable gross receipts over $25,000,000
(b) Retail trade includes the activity of retailing any type of personal property, generally without significantly transforming its characteristics, and rendering services incidental to the retail sale of property; it includes business activity described in NAICS codes 44 and 45.
(c) Wholesale trade includes the activity of wholesaling property, generally without transformation, and rendering services incidental to the sale of property on a wholesale basis; it includes business activity described in NAICS code 42.
(d) Certain services includes the repair and maintenance services, personal and laundry services, and religious, grantmaking, civic, professional and similar organizations that are not otherwise exempt; it includes business activity described in NAICS codes 811, 812 and 813.
(f) The amount of gross receipts from certain services activities subject to the gross receipts tax shall be the total amount determined under Section 956.2.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Proposition F, 11/3/2020, Eff. 12/29/2020, Oper. 1/1/2021; Ord. 152-21, File No. 210828, App. 9/29/2021, Eff. 10/30/2021; Ord. 151-23, File No. 230155, App. 7/28/2023, Eff. 8/28/2023, Retro. 1/1/2023)
(a)
The gross receipts tax rates applicable to the business activities of manufacturing, transportation and warehousing, information, biotechnology, clean technology, and food services are:
(1) For tax years beginning on or after January 1, 2018 and ending on or before December 31, 2020:
0.125% (e.g., $1.25 per $1,000) for gross receipts between $0 and $1,000,000
0.205% (e.g., $2.05 per $1,000) for gross receipts between $1,000,001 and $2,500,000
0.37% (e.g., $3.70 per $1,000) for gross receipts between $2,500,001 and $25,000,000
0.475% (e.g., $4.75 per $1,000) for gross receipts over $25,000,000
(2) For the business activities of manufacturing and food services:
(A) For tax years 2021 through and including 2024:
0.088% (e.g., $0.88 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.144% (e.g., $1.44 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.259% (e.g., $2.59 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.665% (e.g., $6.65 per $1,000) for taxable gross receipts over $25,000,000
(B) For tax year 2025:
0.131% (e.g., $1.31 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.215% (e.g., $2.15 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.389% (e.g., $3.89 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.665% (e.g., $6.65 per $1,000) for taxable gross receipts over $25,000,000
(C) For tax years beginning on or after January 1, 2026:
0.175% (e.g., $1.75 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.287% (e.g., $2.87 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.518% (e.g., $5.18 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.665% (e.g., $6.65 per $1,000) for taxable gross receipts over $25,000,000
(3) For the business activities of transportation and warehousing and clean technology for tax years beginning on or after January 1, 2021:
0.175% (e.g., $1.75 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.287% (e.g., $2.87 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.518% (e.g., $5.18 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.665% (e.g., $6.65 per $1,000) for taxable gross receipts over $25,000,000
(4) For the business activity of biotechnology:
(A) For tax year 2021:
0.175% (e.g., $1.75 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.287% (e.g., $2.87 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.518% (e.g., $5.18 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.665% (e.g., $6.65 per $1,000) for taxable gross receipts over $25,000,000
(B) For tax year 2022 and, if the Controller does not certify under Section 953.10 that the 90% gross receipts threshold has been met for tax year 2023, for tax year 2023:
0.181% (e.g., $1.81 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.297% (e.g., $2.97 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.537% (e.g., $5.37 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.689% (e.g., $6.89 per $1,000) for taxable gross receipts over $25,000,000
0.188% (e.g., $1.88 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.308% (e.g., $3.08 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.555% (e.g., $5.55 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.713% (e.g., $7.13 per $1,000) for taxable gross receipts over $25,000,000
(D) For tax year 2024 if the Controller certifies under Section 953.10 that the 95% gross receipts threshold has been met for tax year 2024, and for tax years beginning on or after January 1, 2025:
0.194% (e.g., $1.94 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.318% (e.g., $3.18 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.574% (e.g., $5.74 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.736% (e.g., $7.36 per $1,000) for taxable gross receipts over $25,000,000
(5) For the business activity of information:
(A) For tax year 2021:
0.56% (e.g., $5.60 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.644% (e.g., $6.44 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.714% (e.g., $7.14 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.784% (e.g., $7.84 per $1,000) for taxable gross receipts over $25,000,000
(B) For tax year 2022 and, if the Controller does not certify under Section 953.10 that the 90% gross receipts threshold has been met for tax year 2023, for tax year 2023:
0.573% (e.g., $5.73 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.665% (e.g., $6.65 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.751% (e.g., $7.51 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.832% (e.g., $8.32 per $1,000) for taxable gross receipts over $25,000,000
0.579% (e.g., $5.79 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.675% (e.g., $6.75 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.77% (e.g., $7.70 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.855% (e.g., $8.55 per $1,000) for taxable gross receipts over $25,000,000
(D) For tax year 2024 if the Controller certifies under Section 953.10 that the 95% gross receipts threshold has been met for tax year 2024, and for tax years beginning on or after January 1, 2025:
0.585% (e.g., $5.85 per $1,000) for taxable gross receipts between $0 and $1,000,000
0.685% (e.g., $6.85 per $1,000) for taxable gross receipts between $1,000,000.01 and $2,500,000
0.788% (e.g., $7.88 per $1,000) for taxable gross receipts between $2,500,000.01 and $25,000,000
0.879% (e.g., $8.79 per $1,000) for taxable gross receipts over $25,000,000
(b) Manufacturing includes the activity of transforming materials, substances or components into new products by mechanical, physical or chemical means; it includes the activity of assembling component parts of manufactured products; it includes business activity described in NAICS codes 31, 32 and 33.
(c) Transportation and warehousing includes the activities of providing transportation of passengers and/or goods, warehousing and storage for goods, scenic and sightseeing transportation, and support activities related to modes of transportation; it includes business activity described in NAICS codes 48 and 49.
(d) Information includes producing and distributing information or cultural products; providing the means to transmit or distribute those products; and processing data; it includes business activity described in NAICS code 51.
(e) For purposes of this Article 12-A-1:
(1) Biotechnology includes the activity of conducting biotechnology research and experimental development, and operating laboratories for biotechnology research and experimental development, using DNA, cells, and/or bioprocessing techniques, as well as the application thereof to the development of therapeutics, diagnostic products and/or devices to improve human health, animal health, and agriculture. For purposes of this Section 953.2(e)(1):
(A) “DNA” is a nucleic acid sequence, or fragment thereof, that contains the genetic information for cell growth, division, and function. Examples of DNA include recombinant DNA, RNA, mRNA, antisense, RNAi, genes and ESTs.
(B) “Cells” are membrane bound structures containing biomolecules, such as nucleic acids, proteins, and polysaccharides. This definition includes both prokaryotic (bacterial) and eukaryotic (animal or plant) cells. Examples include primary cells, transformed or cultured cells, stem cells, iPS, ESCs, fused cells and cell lines.
(C) “Bioprocessing” is the use of microbial, plant, or animal cells or portions thereof, for the production of therapeutics or diagnostics. Bioprocessing includes the extraction of compounds from biomaterials; reaction of biomaterials, such as microbial fermentation, cell culture, cell fusion or biotransformation by enzymes; and separation of product from biomaterials using filtration, purification, precipitation, centrifugation, solvents, chromatography or other means.
(A) Research and development and/or associated manufacturing applying scientific advances to the production, distribution or storage of clean energy.
(B) Research and development and/or associated manufacturing applying scientific advances to prototype or commercially viable materials and products powered by clean energy, including but not limited to single passenger vehicles and fueling infrastructure.
(C) Research and development and/or associated manufacturing applying scientific advances to prototype or commercially viable techniques, materials and products that materially improve energy efficiency, water conservation or air quality.
(D) Research and development, manufacture and/or installation of solar panels.
(3) For purposes of Section 953.2(e)(2), “clean energy” means energy utilizing energy produced by wind, solar energy, landfill gas, geothermal resources, ocean thermal energy conversion, quantifiable energy conservation measures, tidal energy, wave energy, biomass, biofuels, or hydrogen fuels derived from renewable sources, excluding:
(A) any fossil fuel based energy production, including but not limited to, clean coal, clean diesel, natural gas and hydrogen from natural gas;
(B) any nuclear based energy production;
(C) waste to energy via combustion or incineration; or/and
(D) other technologies that are detrimental to human health.
(f) Food services includes the activity of preparing meals, snacks and/or beverages to customer order for immediate on-premises or off-premises consumption; it includes drinking places; it includes business activity described in NAICS code 722.
(Added by Proposition E, App. 11/6/2012, Oper. 1/1/2014; amended by Proposition F, 11/3/2020, Eff. 12/29/2020, Oper. 1/1/2021; Ord. 152-21, File No. 210828, App. 9/29/2021, Eff. 10/30/2021; Ord. 151-23, File No. 230155, App. 7/28/2023, Eff. 8/28/2023, Retro. 1/1/2023)
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