Ohio – Sales and Use Tax and Commercial Activity Tax Changes

SALT Report 2690 – Ohio Governor John Kasich signed the State’s fiscal year 2014-2015 budget, which makes several sales and use tax and commercial activity tax changes.

Sales and Use Tax

Effective September 1, 2013 the state sales tax rate that is imposed on the storage, use or consumption of tangible personal property or services and taxable retail sales will increase from 5.5% to 5.75%.  This rate does not include any local sales and use taxes that may be imposed in certain jurisdictions.

Effective January 1, 2014, all transactions in which a specified digital product is provided for permanent or less than permanent use are taxable, regardless of whether continued payment is required.  Specified digital products include any electronically transferred digital audiovisual work, digital audio work, or digital book.

Commercial Activity Tax

An exclusion from the Commercial Activity Tax has been created for the receipts derived from the sale of agricultural commodities by agricultural commodity handlers who are licensed by the Department of Agriculture.

Effective July 1, 2014, the motor fuels Commercial Activity Tax will be replaced by the Motor Fuel Receipts Tax.  The MFRT is similar to the CAT; however, it is based on the receipts from one sale or exchange of motor fuel and is imposed on suppliers.

The MFRT rate will be calculated at 0.65% of the supplier’s gross receipts, which is higher than the CAT rate of 0.26%.  However, the MFRT will only tax motor fuels once, while the CAT applies to multiple transactions.

For purposes of the MFRT gross receipts includes all amounts received from the transaction, without any deductions taken for the cost of the items sold or the supplier’s expenses.

For Further Information

Ohio General Assembly – House Bill 59, Laws 2013