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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 120. Corporation Income Tax
1/27/2023

23VAC10-120-83. Minimum tax on telecommunications companies.

A. Generally. Effective for any taxable year that includes January 1, 1989, or begins after January 1, 1989, a telecommunications company may be subject to a minimum tax. The minimum tax will be applicable when such tax exceeds the corporate income tax imposed under § 58.1-400 of the Code of Virginia.

B. Determination of gross receipts. For each taxable year, the minimum tax of a telecommunications company is computed on the gross receipts of such company for the calendar year which ends during the taxable year.

If a company files an income tax return for a period of less than 12 months, the minimum tax is computed on the gross receipts for the calendar year which ends during the taxable period. If no calendar year ends during the taxable period, the minimum tax is computed on the gross receipts of the most recent calendar year which ended before the taxable period.

For taxable years that begin before January 1, 1989, include January 1, 1989, and end before December 31, 1989, the minimum tax is computed on the gross receipts received during calendar year 1988. The minimum tax rate applicable to calendar year 1989 shall be used.

EXAMPLE 1: If Company A's taxable year begins on April 1, 1990, and ends March 30, 1991, the minimum tax would be computed on the gross receipts for calendar year 1990.

EXAMPLE 2: Company B, a calendar year filer, goes out of business on April 30, 1992. For income tax purposes, its taxable year begins on January 1, 1992, and ends on April 30, 1992. Its minimum tax would be computed on the gross receipts for calendar year 1991.

C. Minimum tax rate. In computing the minimum tax, a telecommunications company will use the minimum tax rate applicable to the calendar year as determined in subsection B above. The applicable minimum tax rate for each calendar year will be phased down in accordance with the rate schedule set forth in § 58.1-400.1 of the Code of Virginia, as follows:


  Gross Receipts Earned During          Minimum        


         Calender Year                  Tax Rate       


                 1989            1.2% of gross receipts


                 1990            1.2% of gross receipts


                 1991            1.0% of gross receipts


                 1992            0.9% of gross receipts


                 1993            0.8% of gross receipts


                 1994            0.7% of gross receipts


                 1995            0.6% of gross receipts


                 1996 and years  0.5% of gross receipts


                 thereafter                            

D. Computation of minimum tax.

1. Generally. For each taxable year, the minimum tax liability of a telecommunications company is computed by multiplying the gross receipts for the calendar year specified in subsection B by the minimum tax rate specified in subsection C.

EXAMPLE: For taxable year 1991, Telecommunications Company (TC) files its federal and Virginia income tax return on a fiscal year basis for the year beginning July 1, 1991, and ending June 30, 1992. For taxable year 1991, TC bases its minimum tax liability on its gross receipts earned during calendar year 1991, which is multiplied by the minimum tax rate for calendar 1991 (1.0%) to compute its minimum tax liability.

2. Short taxable periods. If the income tax return is filed for a taxable period of less than 12 months, the minimum tax should be computed as follows:

a. Compute the minimum tax as set forth in subsection D 1 above.

b. Prorate the tax by multiplying the minimum tax by the number of months in the short taxable period divided by 12.

EXAMPLE: The same facts as in the example above, except that TC goes out of business on December 31, 1991, and files a short taxable period return for the period beginning July 1, 1991, and ending December 31, 1991. TC bases its minimum tax liability on its gross receipts earned during calendar year 1991. The amount of gross receipts earned during calendar year 1991 is multiplied by the minimum tax rate for calendar year 1991 (1.0%) and the result is multiplied by 6/12 (the number of months in the short taxable period divided by 12) to compute its minimum tax liability.

Statutory Authority

§§ 58.1-203 and 58.1-400.1 of the Code of Virginia.

Historical Notes

Derived from VR630-3-400.1 § 4, eff. January 3, 1990.

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