It is enacted by the General Assembly as follows:

SECTION 1. Chapter 44-11 of the General Laws entitled "Business Corporation Tax" is hereby amended by adding thereto the following section:

{ADD 44-11-14.4. Allocation and apportionment-retirement and pension plans. -- Notwithstanding any provisions of the chapter, any taxpayer located within the state that sells management, distribution or administration services, including without limitations, transfer agent, fund accounting, custody and other similar or related services, as described in this section to or on behalf of an employee retirement plan or pension plan may elect the allocation and apportionment method for such taxpayer's net income provided for in this section. The election, if made, shall be irrevocable for successive periods of five (5) years. All net income derived directly and indirectly from the sale of such management, distribution, or administration services to or on behalf of a retirement plan or pension plan, including net income received directly or indirectly from trustees, sponsors or participants of such a retirement plan or pension plan, shall be apportioned to Rhode Island only to the extent that the beneficiaries or participants of a retirement plan or pension plan are domiciled in Rhode Island as follows:

(1) Net income shall be multiplied by a fraction, the numerator of which shall be Rhode Island receipts from such services during the taxable year and the denominator of which shall be the total receipts everywhere from such services for the same taxable year.

(2) For purposes of this section, Rhode Island receipts shall be determined by multiplying total receipts for the taxable year from a retirement plan or pension plan for which such services are performed by a fraction. The numerator of the fraction shall be the average of the number of total beneficiaries or participants of each such retirement plan or pension plan domiciled in this state at the beginning of and at the end of taxable year of such taxpayer, and the denominator of the fraction shall be the average of the number of total beneficiaries or participants of such retirement plan or pension plan everywhere at the beginning of and at the end of each taxable year of such taxpayer. ADD}

SECTION 2. This act shall take effect upon passage and shall be effective for taxable years beginning on or after January 1, 1997.