58.1-609.3 - Commercial and industrial exemptions.
§ 58.1-609.3. Commercial and industrial exemptions.
The tax imposed by this chapter or pursuant to the authority granted in §§58.1-605 and 58.1-606 shall not apply to the following:
1. Personal property purchased by a contractor which is used solely inanother state or in a foreign country, which could be purchased by suchcontractor for such use free from sales tax in such other state or foreigncountry, and which is stored temporarily in Virginia pending shipment to suchstate or country.
2. (i) Industrial materials for future processing, manufacturing, refining,or conversion into articles of tangible personal property for resale wheresuch industrial materials either enter into the production of or become acomponent part of the finished product; (ii) industrial materials that arecoated upon or impregnated into the product at any stage of its beingprocessed, manufactured, refined, or converted for resale; (iii) machinery ortools or repair parts therefor or replacements thereof, fuel, power, energy,or supplies, used directly in processing, manufacturing, refining, mining orconverting products for sale or resale; (iv) materials, containers, labels,sacks, cans, boxes, drums or bags for future use for packaging tangiblepersonal property for shipment or sale; or (v) equipment, printing orsupplies used directly to produce a publication described in subdivision 3 of§ 58.1-609.6 whether it is ultimately sold at retail or for resale ordistribution at no cost. Machinery, tools and equipment, or repair partstherefor or replacements thereof, shall be exempt if the preponderance oftheir use is directly in processing, manufacturing, refining, mining orconverting products for sale or resale. The provisions of this subsection donot apply to the drilling or extraction of oil, gas, natural gas and coalbedmethane gas. In addition, the exemption provided herein shall not beapplicable to any machinery, tools, and equipment, or any other tangiblepersonal property used by a public service corporation in the generation ofelectric power, except for raw materials that are inputs to production ofelectricity, including fuel.
3. Tangible personal property sold or leased to a public service corporationengaged in business as a common carrier of property or passengers by railway,for use or consumption by such common carrier directly in the rendition ofits public service.
4. Ships or vessels, or repairs and alterations thereof, used or to be usedexclusively or principally in interstate or foreign commerce; fuel andsupplies for use or consumption aboard ships or vessels plying the high seas,either in intercoastal trade between ports in the Commonwealth and ports inother states of the United States or its territories or possessions, or inforeign commerce between ports in the Commonwealth and ports in foreigncountries, when delivered directly to such ships or vessels; or tangiblepersonal property used directly in the building, conversion or repair of theships or vessels covered by this subdivision. This exemption shall includedredges, their supporting equipment, attendant vessels, and fuel and suppliesfor use or consumption aboard such vessels, provided the dredges are usedexclusively or principally in interstate or foreign commerce.
5. Tangible personal property purchased for use or consumption directly andexclusively in basic research or research and development in the experimentalor laboratory sense.
6. Tangible personal property sold or leased to an airline operating inintrastate, interstate or foreign commerce as a common carrier providingscheduled air service on a continuing basis to one or more Virginia airportsat least one day per week, for use or consumption by such airline directly inthe rendition of its common carrier service.
7. Meals furnished by restaurants or food service operators to employees as apart of wages.
8. Tangible personal property including machinery and tools, repair parts orreplacements thereof, and supplies and materials used directly in maintainingand preparing textile products for rental or leasing by an industrialprocessor engaged in the commercial leasing or renting of laundered textileproducts.
9. (i) Certified pollution control equipment and facilities as defined in §58.1-3660, except for any equipment that has not been certified to theDepartment of Taxation by a state certifying authority pursuant to suchsection and (ii) effective retroactive to July 1, 1994, and ending July 1,2006, certified pollution control equipment and facilities as defined in §58.1-3660 and which, in accordance with such section, have been certified bythe Department of Mines, Minerals and Energy for coal, oil and gasproduction, including gas, natural gas, and coalbed methane gas.
10. Parts, tires, meters and dispatch radios sold or leased to taxicaboperators for use or consumption directly in the rendition of their services.
11. High speed electrostatic duplicators or any other duplicators which havea printing capacity of 4,000 impressions or more per hour purchased or leasedby persons engaged primarily in the printing or photocopying of products forsale or resale.
12. From July 1, 1994, and ending July 1, 2011, raw materials, fuel, power,energy, supplies, machinery or tools or repair parts therefor or replacementsthereof, used directly in the drilling, extraction, or processing of naturalgas or oil and the reclamation of the well area. For the purposes of thissection, the term "natural gas" shall mean "gas," "natural gas," and"coalbed methane gas" as defined in § 45.1-361.1. For the purposes of thissection, "drilling," "extraction," and "processing" shall includeproduction, inspection, testing, dewatering, dehydration, or distillation ofraw natural gas into a usable condition consistent with commercial practices,and the gathering and transportation of raw natural gas to a facility whereinthe gas is converted into such a usable condition. Machinery, tools andequipment, or repair parts therefor or replacements thereof, shall be exemptif the preponderance of their use is directly in the drilling, extraction,refining, or processing of natural gas or oil for sale or resale, or in wellarea reclamation activities required by state or federal law.
13. Beginning July 1, 1997, and ending July 1, 2011, (i) the sale, lease,use, storage, consumption, or distribution of an orbital or suborbital spacefacility, space propulsion system, space vehicle, satellite, or space stationof any kind possessing space flight capability, including the componentsthereof, irrespective of whether such facility, system, vehicle, satellite,or station is returned to this Commonwealth for subsequent use, storage orconsumption in any manner when used to conduct spaceport activities; (ii) thesale, lease, use, storage, consumption or distribution of tangible personalproperty placed on or used aboard any orbital or suborbital space facility,space propulsion system, space vehicle, satellite or space station of anykind, irrespective of whether such tangible personal property is returned tothis Commonwealth for subsequent use, storage or consumption in any mannerwhen used to conduct spaceport activities; (iii) fuels of such quality notadapted for use in ordinary vehicles, being produced for, sold andexclusively used for space flight when used to conduct spaceport activities;(iv) the sale, lease, use, storage, consumption or distribution of machineryand equipment purchased, sold, leased, rented or used exclusively forspaceport activities and the sale of goods and services provided to operateand maintain launch facilities, launch equipment, payload processingfacilities and payload processing equipment used to conduct spaceportactivities.
For purposes of this subdivision, "spaceport activities" means activitiesdirected or sponsored at a facility owned, leased, or operated by or onbehalf of the Virginia Commercial Space Flight Authority.
The exemptions provided by this subdivision shall not be denied by reason ofa failure, postponement or cancellation of a launch of any orbital orsuborbital space facility, space propulsion system, space vehicle, satelliteor space station of any kind or the destruction of any launch vehicle or anycomponents thereof.
14. Semiconductor cleanrooms or equipment, fuel, power, energy, supplies, orother tangible personal property used primarily in the integrated process ofdesigning, developing, manufacturing, or testing a semiconductor product, asemiconductor manufacturing process or subprocess, or semiconductor equipmentwithout regard to whether the property is actually contained in or used in acleanroom environment, touches the product, is used before or afterproduction, or is affixed to or incorporated into real estate.
15. Semiconductor wafers for use or consumption by a semiconductormanufacturer.
16. Railroad rolling stock when sold or leased by the manufacturer thereof.
17. Computer equipment purchased or leased on or before June 30, 2011, usedin data centers located in a Virginia locality having an unemployment rateabove 4.9 percent for the calendar quarter ending November 2007, for theprocessing, storage, retrieval, or communication of data, including but notlimited to servers, routers, connections, and other enabling hardware whenpart of a new investment of at least $75 million in such exempt property,when such investment results in the creation of at least 100 new jobs payingat least twice the prevailing average wage in that locality, so long as suchinvestment was made in accordance with a memorandum of understanding with theVirginia Economic Development Partnership Authority entered into or amendedbetween January 1, 2008, and December 31, 2008. The exemption shall alsoapply to any such computer equipment purchased or leased to upgrade, add to,or replace computer equipment purchased or leased in the initial investment.The exemption shall not apply to any computer software sold separately fromthe computer equipment, nor shall it apply to general building improvementsor fixtures.
18. Beginning July 1, 2010, and ending June 30, 2020, computer equipment orenabling software purchased or leased for the processing, storage, retrieval,or communication of data, including but not limited to servers, routers,connections, and other enabling hardware, including chillers and backupgenerators used or to be used in the operation of the equipment exempted inthis paragraph, provided that such computer equipment or enabling software ispurchased or leased for use in a data center that (i) is located in aVirginia locality, (ii) results in a new capital investment on or afterJanuary 1, 2009, of at least $150 million, and (iii) results in the creationon or after July 1, 2009, of at least 50 new jobs associated with theoperation or maintenance of the data center provided that such jobs pay atleast one and one-half times the prevailing average wage in that locality.The requirement of at least 50 new jobs is reduced to 25 new jobs if the datacenter is located in a locality that has an unemployment rate for thepreceding year of at least 150 percent of the average statewide unemploymentrate for such year as determined by the Virginia Economic DevelopmentPartnership or is located in an enterprise zone. Prior to claiming suchexemption, any qualifying person claiming the exemption must enter into amemorandum of understanding with the Virginia Economic DevelopmentPartnership Authority that at a minimum provides the details for determiningthe amount of capital investment made and the number of new jobs created, thetimeline for achieving the capital investment and new job goals, therepayment obligations should those goals not be achieved, and any conditionsunder which repayment by the qualifying person claiming the exemption may berequired. In addition, the exemption shall apply to any such computerequipment or enabling software purchased or leased to upgrade, supplement, orreplace computer equipment or enabling software purchased or leased in theinitial investment. The exemption shall not apply to any other computersoftware otherwise taxable under Chapter 6 of Title 58.1 that is sold orleased separately from the computer equipment, nor shall it apply to generalbuilding improvements or other fixtures.
(1993, c. 310; 1994, cc. 365, 381; 1995, cc. 101, 204, 719; 1996, c. 816;1997, c. 834; 2001, cc. 429, 468, 769; 2003, c. 859; 2004, Sp. Sess. I, c. 3;2006, cc. 385, 519, 524, 541, 618; 2007, c. 751; 2008, cc. 558, 764; 2010,cc. 784, 826.)