SALT Report 1507 – Georgia Governor Nathan Deal recently signed legislation that simplifies the sales tax exemptions for the manufacturing, mining, and agricultural industries and makes changes to other sales tax incentives, as detailed below.
Effective January 1, 2013, HB 386 provides an exemption for manufacturers engaged in the “manufacture of tangible personal property.” The bill defines a manufacturer as someone who is regarded as being a manufacturer or anyone who is classified as a manufacturer under the 2007 North American Industrial Classification System (NAICS) Sector 21 (Mining, Quarrying, and Oil and Gas Extraction), Sectors 31-33 (Manufacturing), Industry Code 22111 (Electric Power Generation), or Specific Code 511110 (Newspaper Publishers).
The new exemptions replace existing exemptions and apply to the sale, use, or storage of:
- Machinery and equipment that is necessary and integral to the manufacture of tangible personal property, and
- Industrial materials and packaging supplies
Energy Used in Manufacturing
Effective January 1, 2013, a four-year phase-out regarding the imposition of sales and use tax on the sale, use, storage, or consumption of energy used to manufacture tangible personal property at a manufacturing plant in Georgia. The phase-out schedule is as follows:
- From January 1, 2013, through December 31, 2013, a 25% exemption from the 4% state sales and use tax rate and any 1% local sales and use tax
- From January 1, 2014, through December 31, 2014, the above 25% exemption increases to 50%
- From January 1, 2015, through December 31, 2015, the exemption increases to 75%
- On January 1, 2016, the exemption increases to 100%
For those services regularly billed on a monthly basis, the beginning of the phase-out will apply to services billed on or after January 1, 2013. Those qualifying for a full or partial exemption under the phase-out schedule must certify to the seller that the exemption applies. Sellers are relieved of the burden of proving a purchaser qualifies for the exemption if the seller obtains an exemption certificate from the purchaser.
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