SALT Report 2984 – The Arizona Department of Revenue released a list of the local transaction privilege tax changes that will take effect in 2013.
An increase in the health services district tax will become effective on October 1, 2013. The health services tax will be applied at 0.112% on most transactions this will raise the total combined rate to 6.712%. This rate change will affect the following classifications:
- Non-metal mining – 3.812%
- Transient lodging – 6.71%
- Utilities, communications, transporting, private railcar, pipelines, publishing, job printing, restaurant and bar, amusements, rentals of personal property, prime contracting, retail, and owner/builder contracting – 6.712%
- Use tax and use tax inventory will remain unchanged at 5.6%
However, if a contract was entered into, or a written bid was made, by a prime contractor or owner/builder before June 18, 2013 it will not subject to the increased rates. To qualify for the reduced rate, the prime contractor or owner builder must maintain documentation to verify the date of the contract or written bid.
Commercial Lease Exemption
This was amended pursuant to the provisions of House Bill 2324, which created an exemption from tax under the commercial lease classification for leases of real property between affiliated companies, businesses, persons, or reciprocal insurers. All cities stopped imposing transaction privilege taxes on these leases effective July 1, 2013. The exemption at the state and county level took effect on September 13, 2013 and is no longer collected.
E911 Excise Tax
Effective January 1, 2014, prepaid wireless telecommunications retailers, rather than the service providers, will be required to remit the E911 excise tax. The tax is 0.80% of the gross proceeds of sales or gross income derived from the retail sale of prepaid wireless telecommunications services. Retailers may retain 3% of the total tax that they collect from their customers.
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