Franchise Taxes on Business Income in Delaware

April 13, 2006

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Delaware imposes an annual franchise tax on domestic corporations (corporations organized in Delaware) that conduct business in Delaware. This tax is determined by the number of shares your corporation has issued to its shareholders. For the rate based on the number of authorized shares, the amount of tax is as follows:

Number of Shares	Amount of Tax
3,000 shares or less	$35
More than 3,000, but not over 5,000 shares	$62.50
More than 5,000 shares, but not over 10,000 shares	$112.50
Over 10,000 shares	$112.50 plus $62.50 for each additional 10,000 shares

For the rate based on assumed capital value, the amount of tax based on no-par-value shares is determined as follows:

Assumed No-Par Capital Value	Amount of Tax
$300,000 or less	$35
More than $300,000, but not over $500,000	$62.50
More than $500,000, but not over $1,000,000	$112.50
Over $1,000,000	$112.50 plus $62.50 for each additional $1,000,000 or fraction of no-par value

For par-value shares, the tax is $250 for each $1,000,000, or fraction thereof, in excess of $1,000,000 of assumed par-value capital. The tax liability of a corporation with both par-value and no-par-value shares is the sum of each category.

The franchise tax, however computed, cannot be more than $165,000 or less than $35

Foreign corporations (corporations organized in a state other than Delaware), are not subject to this franchise tax. However, a foreign corporation must file an annual report and include a $60 filing fee.