Washington – Exemptions for Solar Energy Systems and Semiconductor Materials

SALT Report 3048 – The Washington Department of Revenue issued guidance regarding the reduced B&O tax rate for manufacturers of solar energy systems and the amended sales and use tax exemption for items used to process semiconductor materials.

The notice states that during the 2013 legislative session, the reduced B&O tax rate provided by RCW 82.04.294 was extended until June 30, 2017. The preferential rate applies to manufacturers of solar energy systems who use PV modules or stirling converters, as well as to manufacturers of solar grade silicon, silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers that will be used exclusively as components of these systems.

In addition the B&O tax statute was amended to include “solar grade silicon” in the definition of “semiconductor materials” that qualify for the sales and use tax exemption available for purchase of certain gases and chemicals used in the production of semiconductor materials.

Prior to these legislative changes any business that claimed the preferential B&O tax rate was required to electronically file an Annual Tax Incentive Report by April 30th of the year, following the year the preferential rate was claimed. The law changed this requirement and these businesses must now file an Annual Tax Incentive Survey.

The laws regarding the sales and use tax exemption for purchases of chemicals and gases have not changed.  Both RCW 82.08.9651 and RCW 82.12.9651 still require any business that claims the sales and use tax exemption to electronically file an Annual Tax Incentive Report.  This filing requirement is also cross-referenced in RCW 82.32.534, the Annual Report statute; therefore, any business that claims the preferential rate and the sales tax exemption must file both annual documents.

These changes are effective October 1, 2013.

For Further Information

Washington Department of Revenue – Special Notice