Peer-to-Peer Car Rental

Due to recent legislation, peer-to-peer (P2P) car sharing platforms are now required to collect and remit transaction privilege tax (TPT) on all rentals conducted through their platform. A P2P car sharing platform is defined as a business that provides a platform for persons to rent vehicles for a fee. The new legislation went into effect on September 29, 2021.

Businesses Not Included

P2P car sharing platforms DO NOT include:

  • Rental car agents governed by A.R.S. § 20-331.
  • Traditional car rental companies (even though such companies may have a website through which a person can rent a vehicle). Traditional car rental companies usually own the vehicles they rent and do not allow vehicles owned by others to be rented through their platform. These companies are governed by A.R.S. §§ 20-331 and 28-5810.
  • Vehicle rentals which include a driver.

Generally, a P2P platform is intended for renting individually-owned vehicles, or by those who are not in the business of renting vehicles. A traditional car rental company is not prohibited from listing vehicles on a P2P platform and will report the gross income received from the platform in their TPT return. Because the P2P platform will collect and remit all taxes and surcharges, the traditional car rental company will deduct income derived from the P2P platform using deduction code 808.

Individual-owned Shared Vehicle Owners

Individual vehicle owners who are not otherwise in the business of renting vehicles (or any other taxable business activity) that place their vehicles on a P2P platform are not required to have a TPT license. Renting vehicles in any other situation would require that individual to have a TPT license. However, individual vehicle owners are required to certify to the Department that their vehicle is an individual-owned shared vehicle and that either:

  1. TPT or Arizona’s use tax was paid on the vehicle when it was purchased; or 
  2. an out-of-state sales or use tax was paid on the vehicle if the vehicle was purchased out-of-state and subsequently brought into Arizona.

Application of verification may be made to the Department using You will need to fill out this application to certify your individually owned, shared vehicle for Peer-to-Peer sharing use per A.R.S. § 28-9616. An individual vehicle owner must also represent to the P2P platform that the vehicle is a certified individual-owned shared vehicle.  The P2P platform may rely on this representation in good faith.

Note: If an individual cannot provide proof to the Department that transaction privilege tax, sales tax or use tax was paid at the time the vehicle was purchased, then the vehicle cannot be certified. However, an individual vehicle owner may still place their vehicle for rental on a peer to peer platform. The rental of a vehicle that is not certified by the Department will incur the rental surcharge.

Information Needed to Get the Application Started:

  • Vehicle Owner Name
  • Street Address Where Car is Physically Located in Arizona
  • Vehicle Identification Number (VIN)
  • State Vehicle is Registered
  • Proof of Transaction Privilege, Use or Sales Tax Paid in a .TIFF file
  • Valid Email Address of the Owner

Note: There is no fee for this certification.

Please allow 10 to 15 business days for review. After your application and documentation have been verified, they will be approved or denied. The department shall verify the application and notify you of the results via email. If your application is approved you will be notified by email with your certificate. If your application is denied, you may appeal the denial. Please complete this form to start the appeal process.

A vehicle purchased in a private casual sale where no TPT or use tax was paid cannot be certified by the Department as an individual-owned shared vehicle. These vehicles may be posted for rent on a P2P platform, however, the rentals are subject to certain surcharges, as explained below.

Note: Shared vehicle owners have special insurance requirements. Please review A.R.S. § 28-9602.

P2P Platform TPT Registration Requirements

A P2P platform is required to register for a TPT license (the individual vehicle owners are not required to have a TPT license unless they are renting directly to customers or engage in other taxable activities).  A TPT licensed P2P platform must remit all applicable taxes (state, county, city TPT and surcharges, if any), which arise from the shared vehicle transaction.  NOTE: P2P platforms are required to file and remit TPT monthly through the Department’s online portal at  Paper returns are not permitted.

P2P platforms must file under business codes 414 for the state and counties and business code 214 for the cities.  However, because the City of Phoenix imposes an additional tax on short term vehicle rentals, all transactions sourced to the City of Phoenix require the P2P platform to also collect and file under business code 114.

Sourcing the Tax

Shared vehicle transactions are sourced as follows:

  1. If the vehicle is registered in Arizona, then source to the permanent street address of the vehicle owner.
  2. If the vehicle is registered in another state or country, then it should be sourced to the street address where the shared vehicle owner resides while in Arizona.
  3. If the vehicle owner does not reside in Arizona and the vehicle is registered in another state or country, then it should be sourced to the location in Arizona of the shared vehicle at the car sharing start time.

Preparing a Return

Although a P2P platform remits under a special business code (414 state/counties, 214 cities, and 114 Phoenix) the business activity is still subject to TPT under the personal property rental classification.  A.R.S. § 42-5071 requires the gross income derived from the rental business activity to be reported.  Applicable deductions should be applied.

Common Deductions:

  • Rentals to foreign diplomats (as pre-authorized by Office of Foreign Missions and documented with the U.S. Department of State Diplomatic Tax Exemption Card) - Deduction Code 777
  • Renting vehicles 12,000 lbs and heavier on which the motor carrier fee was paid - Deduction Code 660
  • Car rental surcharges collected - Deduction Code 680 (See Surcharge treatment below.)
  • Rentals to qualifying hospitals, qualifying community health centers or a qualifying health care organization (these organizations must provide the P2P platform with a Form 5000HC exemption certificate with their annual letter of qualification issued by the Department) - See the deduction list for corresponding codes.
  • Bad debt - Deduction Code 558
  • Renting to an enrolled Native American if the rental occurs on their own reservation - Deduction Code 570

P2P platforms should not list the individual vehicle owners on the TPT return.  Note: many deductions must be included on an exemption Form 5000.


Surcharges are imposed on short-term rentals (less than 1 year) on vehicles which are:

  1. Designed to carry no more than 14 passengers; 
  2. Registered with the Arizona Department of Transportation to be driven on the road; and 
  3. The rental is sourced to Maricopa County or Pima County.

A.R.S. § 42-5071 requires the gross income derived from the rental business activity to be reported.  As a result, surcharges collected are included in a P2P platform’s reported gross income under the personal property rental business codes (414 state/counties, 214 cities).  Because collected surcharges are not subject to TPT, all surcharges collected should be deducted from the TPT tax base using deduction code 680. The surcharges will be reported and remitted as follows:

Maricopa County Surcharge:  The gross income derived from a short-term vehicle lease sourced to Maricopa County is subject to a 3.25% surcharge. The surcharge shall be no less than $2.50 per leased vehicle.  The first $2.50 of each vehicle lease is reported under business code 053 (this is reported based on the number of leases and not gross income).  All amounts over $2.50 (the difference between 3.25% of gross income less the $2.50 per lease) is reported under business code 153 (this is reported on the remaining gross income).  Statutory authority on these surcharges is found in A.R.S. § 5-839 and A.R.S. § 48-4234.

Pima County Surcharge:  Each short-term vehicle lease sourced to Pima County is subject to a flat $3.50 surcharge and is reported under business code 055 (based on the  number of leases).  Statutory authority on this surcharge is found in A.R.S. § 5-839.

Note: In addition to the city privilege tax imposed on a rental of tangible personal property, the City of Phoenix also imposes an additional short-term car rental tax which is reported under business code 114.  See the Phoenix Municipal Code § 14-452.

For additional information regarding surcharges, please email [email protected].



Computing P2P TPT Due

The computation begins with the P2P’s gross income derived from platform rentals sourced to Arizona. Gross income includes taxes and surcharges collected.


P2P Platform’s Gross Income


Preparing a P2P Return



Business Code 414

Maricopa County (MAR)

Business Code 214

Chandler (CH)

Business Code 214

Scottsdale (SC)

Add: The gross income derived from the rental of vehicles in Arizona, including TPT and surcharges collected.  This is reported by the County (which includes the State) and City.

*For purposes of this example, it is assumed that 10% of the P2P’s taxable income is derived from rentals of non-certified individually owned vehicles and are subject to a full 3.25% surcharge (i.e.,1,200,000 × 10% = 120,000 subject to surcharge. 120,000 × 3.25% = 3,900 in surcharges).


Common Deductions Codes (DC) including (see above):

Vehicle Rentals

Platform Usage Fees

Taxes Collected

*Surcharges Collected













  Reported Gross Income 1,298,544.00 778,344.00 520,200.00

Taxes Collected (DC: 551)

Surcharges Collected (DC: 680)

Rental to Foreign Diplomat (DC: 777)









  Total Deductions: 100,544.00 60,344.00 40,200.00
Equals: P2Ps Tax Base Net Taxable Income: 1,198,000 718,000.00 480,000.00
Compute: Multiply the Net Taxable Income by the rate Tax Rate:


state/county combined

1.5% 1.75%
Equals: Personal Property Rental Tax sourced to vehicle’s registered in-state owner’s address or, if the vehicle is registered out-of-state, to the address where the rental started. TPT Tax Due: 75,474.00 10,770.00 8,400.00



“Car sharing program agreement” are the terms and conditions agreed to by the shared vehicle owner and the shared vehicle driver regarding use of the shared vehicle.

“Individual-owned shared vehicle” is a vehicle which if purchased in Arizona, transaction privilege tax was paid, or if purchased out-of-state, Arizona’s use tax or another state’s excise or use tax was paid on the purchase.

“Peer-to-peer car sharing” is the authorized use of a shared vehicle by an individual other than the shared vehicle owner through a peer-to-peer car sharing program. It does not include (1) car rental agents; (2) short-term car rentals as a business.

“Peer-to-peer car sharing program” is a platform that enables private vehicle owners to connect with and rent their vehicles to other drivers. It does not include: (1) car rental agents; (2) short-term car rentals as a business.

“Shared vehicle” is a vehicle made available through a P2P platform.

“Shared vehicle driver” is an individual who is authorized to drive the shared vehicle.

“Shared vehicle owner” is the registered owner of a vehicle.

“Shared vehicle transaction” is a transaction which authorizes the use of a shared vehicle on a peer-to-peer car sharing program.