Florida Enacts Sales & Use Tax Exemption to Benefit Manufacturers
Author: Sue Young
In an effort to create a more competitive environment for manufacturers in his state, Florida Gov. Rick Scott has signed legislation to eliminate sales tax on purchases of industrial machinery and equipment.
Effective April 30, 2014, House Bill 7007 provides a sales and use tax exemption for industrial machinery and equipment purchased by manufacturing businesses to be used at a fixed location within the state. To be eligible for this exemption, business and equipment must meet the following criteria:
- The business’s primary activity must be defined by North American Industry Classification System (NAICS) Code 31, 32 or 33 at the specific location where the industrial machinery and equipment are installed.
- Industrial machinery and equipment must be used as an integral part of manufacturing, processing or production.
- Tangible personal property must have a depreciable life of three years or more.
Parts and accessories purchased prior to the in-service date of the machinery and equipment also are eligible for the exemption. Buildings, structural components and heating and air conditioning equipment are excluded from the definition of machinery and equipment.
Manufacturers can take advantage of this exemption until April 30, 2017, when the legislation expires.
Economic development is a priority as Florida seeks to increase business growth within its state. The manufacturer’s sales tax exemption is one of many economic development initiatives outlined in House Bill 7007 and Senate Bill 406. SB 406 includes amendments to corporate tax credits, expansion of sales and use tax exemptions and the creation of a three-day sales tax holiday. Updated corporate income tax credits include the following:
- Removal of the lifetime limit received by an individual for the Qualified Target Industry and Qualified Defense and Space Contractor tax refunds
- Expansion of eligible locations in enterprise zones in which caps per entity were imposed
- A $15 million increase ($3 million annually) in the total amount of tax credits that can be awarded under the New Markets Development Program
To learn more about these Florida incentives, please contact your BKD advisor.