San Francisco's new tax - what it means for asset managers

Fundamental changes to the San Francisco City Business Tax and Registration Certificate Fee are anticipated to significantly impact asset managers and financial institutions in San Francisco (City).

Asset managers should be aware of the complexities and challenges the City’s new Gross Receipts Tax introduces to their business starting in 2014, including:  (1) potential increase in tax liability because the tax base shifts from payroll to gross receipts; (2) increased annual business registration certificate fees to as much as $35,000 (previously capped at $500) for businesses; (3) determination of the gross receipts tax base; (4) complexities in payroll factor based apportionment for flow-through entities; (5) treatment of carried interest and management fees; (6) complications related to the combined reporting mandate and requirement to include flow-through entities; and (7) other uncertainties generally facing all taxpayers.

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