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July 25, 2022

Portland Revenue Division to consider adopting market-based sourcing and other changes to business income tax code for Portland, Oregon

The Portland Revenue Division (Division), which administers taxes for Metro,1 Multnomah County and the City of Portland (City), has proposed changes (Chapter 7.02 Conformity Proposals 2022) to the business tax codes2 for these jurisdictions that would conform to select state income tax provisions.3 According to the Division, the changes "will be substantially identical" to maintain conformity among the three jurisdictions' tax laws.

Specifically, the Division would amend City Code Section 7.02.610, Apportionment of Income, to conform the local business income tax apportionment provisions with the state's allocation and apportionment provisions in Ore. Rev. Stat., chs. 314, 317 and 318, as well as related administrative rules. All business income would be apportioned to the City using a single sales factor apportionment formula. Sales of tangible personal property would be deemed to be in the City if the property is delivered or shipped to a purchaser in the City. The City, however, would not adopt a throwback standard

Currently, the City uses a modified cost-of-performance rule to source receipts from sales other than sales of tangible personal property. If the changes are codified, the City will follow Oregon's broad market-based sourcing statute and regulations.

The proposed changes also would align Portland's nexus standards with the state's broad economic nexus standard. In addition, the proposed changes would give "business income" and "non-business income" the same meaning as "apportionable income" and "nonapportionable income" as defined in Ore. Rev. Stat. 314.610.

Comments on the proposed changes are due by August 5, 2022.

The proposed changes, if adopted, would apply to tax years beginning on or after January 1, 2023.


The proposed changes would align with the state's business income tax apportionment provisions but would not incorporate the state's throwback rules for purposes of local business tax apportionment. As a reminder, the combined rate for all three taxes is 5.6%. Thus, taxpayers should determine how the change to market sourcing could impact their City, County and Metro tax liability. Nevertheless, these proposed changes, if adopted, will reduce the difference between these local and state apportionment provisions and align nexus rules, which will help ease the compliance burden.

Interest parties should review the proposed changes and consider submitting comments by the August 5, 2022 deadline.

Additional information is available on the Revenue Division's webpage.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Gary Holcomb (


1 Metro is a regional government that serves those in Clackamas, Multnomah and Washington counties. It encompasses Portland and 23 other cities.

2 The changes would specifically affect the Portland Business License Tax (a net income tax on business activity conducted within the City of Portland); the Multnomah County Business Income Tax (an income tax on net business income); and the Metro Supportive Housing Services Business Income Tax (which was approved by voters in 2020 and, starting in 2021, imposes a 1% business profits tax imposed on businesses with gross receipts over $5 million per year).

3 The Division also is considering administrative and housekeeping changes (Chapter 7.02 Proposed Administrative and Housekeeping Changes 2022), which are not discussed in this Alert.