                                 CODE OF VIRGINIA

RETAIL COMPANIES; APPORTIONMENT (§ 58.1-422.1)

A. For taxable years beginning on or after July 1, 2012, the Virginia taxable
income of a retail company, excluding income allocable under § 58.1-407, shall
be apportioned within and without the Commonwealth as follows:

   1. From July 1, 2012, until July 1, 2014, by multiplying such income by a
   fraction, the numerator of which is the property factor plus the payroll
   factor plus triple the sales factor and the denominator of which is five,
   except that when the sales factor does not exist, the denominator of the
   fraction shall be the number of existing factors, and when the sales factor
   exists but the payroll factor or property factor does not exist, the
   denominator of the fraction shall be the number of existing factors plus two;

   2. From July 1, 2014, until July 1, 2015, by multiplying such income by a
   fraction, the numerator of which is the property factor plus the payroll
   factor plus quadruple the sales factor and the denominator of which is six,
   except that when the sales factor does not exist, the denominator of the
   fraction shall be the number of existing factors, and when the sales factor
   exists but the payroll factor or property factor does not exist, the
   denominator of the fraction shall be the number of existing factors plus
   three; and

   3. From July 1, 2015, and thereafter, by multiplying such income by the sales
   factor.

B. As used in this section, &#8220;retail company&#8221; means a domestic or
foreign corporation primarily engaged in activities that, in accordance with the
North American Industry Classification System (NAICS), United States Manual,
United States Office of Management and Budget, 1997 Edition, would be included
in Sectors 44-45.

C. Any eligible company, as defined in &#xA7; 58.1-405.1, may subtract the value
of its sales in the Commonwealth during the taxable year from the numerator of
the ratio in subdivision A 3. Such eligible company may make such modification
for the taxable year in which it first becomes eligible and for the six
subsequent, consecutive taxable years, except for any year in which the eligible
company&#8217;s (i) total, cumulative new capital investment falls below the
applicable initial threshold or (ii) number of new jobs falls below the
applicable initial threshold.

D. For taxable years beginning on or after January 1, 2023, corporations that
are affiliated within the meaning of &#xA7; 58.1-302 and filing on a
consolidated basis may elect to apportion the taxable income of all members of
such affiliated group using the sales factor alone notwithstanding that one or
more members of such affiliated group would be required to use different
apportionment factors if separate returns were filed. Such an election shall be
valid only with respect to taxable years in which 80 percent or more of the
sales of such affiliated group after consolidation and eliminations is derived
from activities of a retail company. Such an election, once made, shall not be
changed without permission of the Department.

HISTORY: 2012, cc. 86, 666; 2018, cc. 801, 802; 2023, cc. 38, 39.