As part of its regulation development and through the public process,
CARB will determine the definition of “
doing business in California” as it relates to the California Corporate Greenhouse Gas (GHG) Reporting Program. As described in the
public workshop (May 29, 2025), CARB’s initial staff concept is based on the
Franchise Tax Board definition (below). Staff is seeking feedback on this concept.
CARB’s initial staff concept is as follows:
An entity is considered to be “doing business in California” for purposes of the reporting regulation if:
(1) the entity is actively engaging in any transaction for the purpose of financial or pecuniary gain or profit (Cal. Revenue & Taxation Code § 23101(a)); and
(2) any of the following conditions is met during any part of a reporting year (Cal. Revenue & Taxation Code § 23101(b)):
(2a) The entity is organized or commercially domiciled in this state.
(2b) Sales, as defined in Revenue and Taxation Code subdivision (e) or (f) of Section 25120 as applicable for the reporting year, of the entity in this state exceed the inflation adjusted thresholds of seventy hundred thirty-five thousand and nineteen ($735,019) (2024). For purposes of this paragraph, sales of the entity include sales by an agent or independent contractor of the entity. For purposes of this paragraph, sales in this state shall be determined using the rules for assigning sales under Sections 25135 and 25136, and the regulations thereunder, as modified by regulations under Section 25137.
(2c) The real property and tangible personal property of the entity in this state exceed the lesser of the inflation adjusted thresholds of seventy-three thousand, five hundred two ($73,502) (2024) or 25 percent of the entity's real property and tangible personal property. The value of real and tangible personal property and the determination of whether property is in this state shall be determined using the rules contained in Sections 25129 to 25131, inclusive, and the regulations thereunder, as modified by regulation under Section 25137.
(2d) The amount paid in this state by the entity for compensation, as defined in subdivision (c) of Section 25120, exceeds the inflation adjusted thresholds of seventythree thousand, five hundred two ($73,502) (2024) or 25 percent of the total compensation paid by the entity. Compensation in this state shall be determined using the rules for assigning payroll contained in Section 25133 and the regulations thereunder, as modified by regulations under Section 25137.
As noted above, CARB is seeking input from stakeholders regarding these definitions, which will be finalized as part of the regulation, as well as input on whether CARB should consider exemptions for certain circumstances.
