Commercial and Industrial Sales & Use Tax Exemption

Virginia offers sales and use tax exemptions for eligible equipment used directly in manufacturing and research and development operations. Prior to exemptions, the Commonwealth’s combined state and local sales and use tax is 5.3% (4.3% state tax and 1.0% local tax). An additional sales tax is imposed in the Hampton Roads, Northern Virginia, and Richmond regions for a total 6.0% rate, in the City of Danville and counties of and Pittsylvania for a total 6.3% rate, in the counties of James the city of Williamsburg for a total of 7.0%. Contact Office of Customer Services Virginia Department of Taxation 804.367.8037 Eligibility Some important exemptions include: Manufacturers’ purchases used directly in production, including parts, industrial fuels, and raw materials Items purchased for resale by distributors Certified pollution-control equipment and facilities Custom computer software Utilities delivered through mains Purchases used directly and exclusively in research and development in the experimental or laboratory sense Most audio production-related purchases equipment of a public corporation used to generate energy derived from sunlight or wind Charges for internet access and sales of software via the internet Purchases used directly and exclusively in activities performed in cooperation with the Virginia Commercial Space Flight Authority Semiconductor clean rooms or equipment and other tangible personal property used primarily in the integrated process of testing a semiconductor product Computer equipment purchased or leased for the communication of data in large data centers materials used by a licensed brewer in the production of beer, and materials such as labels and boxes for use in packaging and shipment for sale Process When purchasing qualified equipment, the eligible company completes Form ST-11, which it provides to the seller. The seller does not collect the retail sales and use tax on the qualifying equipment, but is then responsible for keeping the completed Certificate of Exemption on hand for their records if needed at a later date. Resources Code of Virginia Form ST-11 FAQ What localities have the additional 0.7% tax in the Hampton Roads region? The additional 0.7% regional rate in Hampton Roads applies to the cities of Beach, and Williamsburg; and the counties of Isle of Wight, James York. An additional 1% is imposed in City of Williamsburg and the Counties of James City and York, for a total 7.0% rate. What localities have the additional 0.7% tax in the Richmond region? The additional 0.7% regional rate in the Richmond area is effective beginning October 1, 2020 and applies to the city of Richmond; and the counties of Charles Kent, and Powhatan. What localities have the additional 0.7% tax in the Northern Virginia region? The additional 0.7% regional rate in Northern Virginia applies to the cities of Manassas Park; and in the counties of Prince William. When is the retail sales and use tax due? Retail sales and use tax is due when such property is either (i) delivered to the purchaser, or (ii) paid for in full by the purchaser, whichever occurs first, regardless of when the property is ordered. As such, this is when the exemption must be claimed. This is not a refund given after paying the sales and use tax. What if, after reading the list of items eligible for the tax exemption, it is still unclear whether a specific item will qualify?

Virginia offers sales and use tax exemptions for eligible equipment used directly in manufacturing and research and development operations. Prior to exemptions, the Commonwealth’s combined state and local sales and use tax is 5.3% (4.3% state tax and 1.0% local tax). An additional sales tax is imposed in the Hampton Roads, Northern Virginia, and Richmond