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Franchise Tax in Louisiana

April 13, 2006

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If your business is a domestic corporation (a corporation organized in Louisiana) or a foreign corporation (a corporation organized in a state other than Louisiana), you must file an annual report. The annual report, along with a $25 fee, is due to the Louisiana Secretary of State.

Also, if you're a domestic or a foreign corporation doing business in Louisiana, you must file an annual franchise tax report, along with a franchise tax payment. The franchise tax is based on the amount of outstanding capital stock (the total amount of stock authorized for issue by a corporation), surplus, undivided profits and borrowed capital. The borrowed capital component, however, will be phased out over a seven-year period beginning January 1, 2006, and ending January 1, 2012.

The franchise tax is imposed on the tax base at the rate of $3 for each $1,000, or major fraction, of the amount of capital stock, surplus and undivided profits, and borrowed capital. Effective January 1, 2006, however, the franchise tax rate is $1.50 for each $1,000 or major fraction thereof up to $300,000 of capital employed in Louisiana, and $3 for each $1,000 over $300,000. The initial and minimum corporation franchise tax per year is $10.

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