The Florida Legislature has passed House Bill 7099 (signed April 13 and effective July 1, 2016). House Bill 7099 makes permanent the existing sales and use tax exemption of certain manufacturing machinery and equipment. This exemption was previously scheduled to expire on April 30, 2017. House Bill 7099 also expands the exemption to include machinery and equipment used for certain agricultural postharvest activities (and associated repair parts, materials, and labor) and metals recycling.
The now-permanent exemption applies to industrial machinery and equipment purchased by eligible manufacturing businesses, used at a fixed location in Florida for the manufacture, processing, compounding, or production of tangible personal property for sale. In order to qualify for the exemption, the purchaser’s primary business activity must be classified under codes 31, 32, 33, and 423930 (recyclable material merchant wholesalers) of the North American Industry Classification System (NAIC).
Qualifying machinery and equipment must:
- be used more than 50% of the time in the qualified business activity;
- have a depreciable life of at least three years; and
- be used as an integral part in the manufacturing, processing, compounding, or production of tangible personal property for sale, or an integral part in the recycling of metals for sale.
The prior temporary manufacturing exemption included mixer drums affixed to mixer trucks and the parts and labor required to affix drums to trucks. However, the provisions for mixer drums were specifically excluded from the permanent extension and currently remain scheduled to expire on April 30, 2017.
Other areas impacted by H.B. 7099 include:
- changes to the administration of tourist development taxes;
- modifications to the aviation fuel tax rate;
- clarifications to the tax on tobacco products;
- providing for an adjustment to the tax calculation on liquor and tobacco sold on cruise ships;
- providing that local governing bodies may decide whether to permit the Economic Development property tax exemption to new and expanding businesses located in enterprise zones; and
- establishment of an exemption from property tax, subject to approval by local governing bodies, for up to 20 years for data center equipment located in an enterprise zone; and
- creating a back-to-school sales tax holiday to run from August 5 through August 7, 2016.