San Francisco Business Tax Proposal - Gross Receipts Tax

BOMA San Francisco Members:

The Mayor, Board of Supervisors and the business community have reached an accord on reshaping the current business tax program for the City and County of San Francisco.  The current format is based on payroll. The new tax model will be based on gross receipts. BOMA San Francisco members and staff have been deeply involved in the discussions and have advocated for a fair tax rate for the commercial real estate industry.

Click here to review a summary of the business tax changes;

Click here to review the Legislative Digest for the ordinance;

Click here to review the ordinance.

Abstract

This proposal, if passed by the San Francisco electorate in November, will gradually move the City's business tax system over five years from one based on payroll to one based on gross receipts, starting in 2014.  Please note that the new tax model will also include these items:

• An updated annual business licensing fee schedule that will be effective beginning in 2013.
• Funds allocated to an affordable housing trust fund;
• This new model of gross receipt taxation is less any real estate or parking taxes paid by the property. BOMA is neither supportive or opposed to this tax measure.

Details

The current payroll tax is 1.5% on payrolls that exceed $250,000 annually. The proposed gross receipts tax rate for real estate is .285% on the first $5 million in revenues, and .30% on revenues above $5 million. The gross receipts tax applies only to revenues collected on properties located in the City and County of San Francisco. The rate for real estate revenues above $25 million will increase to .325% in 2020. The new annual business licensing fees will climb from $25 - $500/year to $90 - $35,000 annually.


The rates proposed for the business licensing fees (with the exception of retail and wholesale, which have a slightly lower rate) are as follows:

$0 - $100K = $90

$100K - $250K = $150

$250K - $500K = $250

$500K - $750K = $500

$750K - $1M = $700

$1M - $2.5M = $300 

NOTE: Firms with less than $1M in annual revenues will not pay a gross receipts tax, but will pay a slightly higher annual business licensing fee.  This is why the fee is lower for firms with gross receipts between $1M and $7.5M.

$2.5M - $7.5M = $500

$7.5M - $15M = $1,500

$15M - $25M = $5,000

$25M - $50M = $12,500

$50M - $100M = $22,500

$100M - $200M = $30,000

$200M+ = $35,000