*This information is for Model City Tax Code purposes only

Local Option PP

Sec.___-480

(k) The tax imposed by this Section shall not apply to the gross proceeds of sales or gross income derived from the business of producing, providing or furnishing electricity, electric lights, current, power, natural gas or liquefied petroleum gas sold to:

(1) a qualified manufacturing or smelting business. a utility that claims this deduction shall report each month, on a form prescribed by the department of revenue, the name and address of each qualified manufacturing or smelting business for which this deduction is taken. This paragraph applies to gas transportation services. For the purposes of this paragraph:

(A) "Gas transportation services" means the services of transporting natural gas to a natural gas customer or to a natural gas distribution facility if the natural gas was purchased from a supplier other than the utility.

(B) "Manufacturing" means the performance as a business of an integrated series of operations that places tangible personal property in a form, composition or character different from that in which it was acquired and transforms it into a different product with a distinctive name, character or use. Manufacturing does not include job printing, publishing, packaging, mining, generating electricity or operating a restaurant.

(C) "qualified manufacturing or smelting business" means one of the following:

(i) a business that manufactures or smelts tangible products in this state, of which at least fifty-one percent of the manufactured or smelted products will be exported out-of-state for incorporation into another product or sold out-of-state for a final sale.

(ii) a business that derives at least fifty-one percent of its gross income from the sale of manufactured or smelted products manufactured or smelted by the business.

(iii) a business that uses at least fifty-one percent of its square footage in this state for manufacturing or smelting and business activities directly related to manufacturing or smelting.

(iv) a business that employs at least fifty-one percent of its workforce in this state in manufacturing or smelting and business activities directly related to manufacturing or smelting.

(v) a business that uses at least fifty-one percent of the value of its capitalized assets in this state, as reflected on the business's books and records, for manufacturing or smelting and business activities directly related to manufacturing or smelting.

(D) "Smelting" means to melt or fuse a metalliferous mineral, often with an accompanying chemical change, usually to separate the metal.

(2) a business that operates an international operations center in this state and that is certified by the Arizona Commerce Authority pursuant to A.R.S. Section 41-1520.

Sec.___-660

(ss) the purchase price of electricity, natural gas or liquefied petroleum gas by: 

(1) a qualified manufacturing or smelting business. This paragraph applies to gas transportation services. For the purposes of this paragraph: 

(A) "gas transportation services" means the services of transporting natural gas to a natural gas customer or to a natural gas distribution facility if the natural gas was purchased from a supplier other than the utility.
(B) "manufacturing" means the performance as a business of an integrated series of operations that places tangible personal property in a form, composition or character different from that in which it was acquired and transforms it into a different product with a distinctive name, character or use. Manufacturing does not include job printing, publishing, packaging, mining, generating electricity or operating a restaurant. 
(C) "qualified manufacturing or smelting business" means one of the following: 

(i) a business that manufactures or smelts tangible products in this state, of which at least fifty-one percent (51%) of the manufactured or smelted products will be exported out-of-state for incorporation into another product or sold out-of-state for a final sale. 
(ii) a business that derives at least fifty-one percent (51%) of its gross income from the sale of manufactured or smelted products manufactured or smelted by the business. 
(iii) a business that uses at least fifty-one percent of its square footage in this state for manufacturing or smelting and business activities directly related to manufacturing or smelting. 
(iv) a business that employs at least fifty-one percent (51%) of its workforce in this state in manufacturing or smelting and business activities directly related to manufacturing or smelting. 
(v) a business that uses at least fifty-one percent (51%) of the value of its capitalized assets in this state, as reflected on the business's books and records, for manufacturing or smelting and business activities directly related to manufacturing or smelting. 

(D) "Smelting" means to melt or fuse a metalliferous mineral, often with an accompanying chemical change, usually to separate the metal. 

(2) a business that operates an international operations center in this state and that is certified by the Arizona Commerce Authority pursuant to A.R.S. Section 41-1520.

History: Amended by [MTCC 2014-2018 Legislative Actions Amendment 2018 (12/14/18)]; [Local Option PP - Electricity Gas Sold to Manufacturers (10/10/14)]

Page updated: September 18, 2020