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2004 SPECIAL SESSION I
042637316Be it enacted by the General Assembly of Virginia:
1. That § 58.1-609.3 of the Code of Virginia is amended and reenacted as follows:
§ 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 in another
state or in a foreign country, which could be purchased by such contractor for such
use free from sales tax in such other state or foreign country, and which is stored
temporarily in Virginia pending shipment to such state or country.
2. (i) Industrial materials for future processing, manufacturing, refining, or
conversion into articles of tangible personal property for resale where such industrial
materials either enter into the production of or become a component part of the finished
product; (ii) industrial materials that are coated upon or impregnated into the
product at any stage of its being processed, manufactured, refined, or
converted for resale; (iii) machinery or tools or repair parts therefor or
replacements thereof, fuel, power, energy, or supplies, used directly in
processing, manufacturing, refining, mining or converting products for sale or
resale; (iv) materials, containers, labels, sacks, cans, boxes, drums or bags
for future use for packaging tangible personal property for shipment or sale;
or (v) equipment, printing or supplies 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 or distribution at no cost. Machinery, tools and equipment, or
repair parts therefor or replacements thereof, shall be exempt if the
preponderance of their use is directly in processing, manufacturing, refining,
mining or converting products for sale or resale. The provisions of this
subsection do not apply to the drilling, extraction, refining, or processing of
oil, gas, natural gas and coalbed methane gas. In addition, the exemption
provided herein shall not be applicable to any tangible personal property where the
preponderance of its use is in distributing gas, electricity, power, any other
source of energy, or water to customers.
3. Tangible personal property sold or leased to (i) a public service
corporation subject to a state franchise or license tax upon gross receipts, (ii) a
telecommunications company as defined in § 58.1-400.1 or (iii) a telephone
company chartered in the Commonwealth which is exclusively a local mutual
association and is not designated to accumulate profits for the benefit of, or to
pay dividends to, the stockholders or members thereof, for use or consumption
by such corporation, company, person or mutual association directly in the
rendition of its public service; and tangible personal property sold or leased
to a public service corporation engaged in business as a common carrier of
property or passengers by motor vehicle or railway, for use or consumption by
such common carrier directly in the rendition of its public service.
4. Ships or vessels, or repairs and alterations thereof, used or to be used
exclusively or principally in interstate or foreign commerce; fuel and supplies
for use or consumption aboard ships or vessels plying the high seas, either in
intercoastal trade between ports in the Commonwealth and ports in other states
of the United States or its territories or possessions, or in foreign commerce
between ports in the Commonwealth and ports in foreign countries, when
delivered directly to such ships or vessels; or tangible personal property used
directly in the building, conversion or repair of the ships or vessels covered
by this subdivision. This exemption shall include dredges, their supporting
equipment, attendant vessels, and fuel and supplies for use or consumption
aboard such vessels, provided the dredges are used exclusively or principally
in interstate or foreign commerce.
5. Tangible personal property purchased for use or consumption directly and
exclusively in basic research or research and development in the experimental or
laboratory sense.
6. Tangible personal property sold or leased to an airline operating in
intrastate, interstate or foreign commerce as a common carrier providing
scheduled air service on a continuing basis to one or more Virginia airports at
least one day per week, for use or consumption by such airline directly in the
rendition of its common carrier service.
7. Meals furnished by restaurants or food service operators to employees as a
part of wages.
8. Tangible personal property including machinery and tools, repair parts or
replacements thereof, and supplies and materials used directly in maintaining and
preparing textile products for rental or leasing by an industrial processor
engaged in the commercial leasing or renting of laundered textile products.
9. (i) Certified pollution control equipment and facilities as defined in §
58.1-3660, except for any equipment that has not been certified to the
Department of Taxation by a state certifying authority pursuant to such section
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 by the Department of
Mines, Minerals and Energy for coal, oil and gas production, including gas, natural
gas, and coalbed methane gas.
10. Parts, tires, meters and dispatch radios sold or leased to taxicab
operators for use or consumption directly in the rendition of their services.
11. High speed electrostatic duplicators or any other duplicators which have a
printing capacity of 4,000 impressions or more per hour purchased or leased by
persons engaged primarily in the printing or photocopying of products for sale or
resale.
12. From July 1, 1994, and ending July 1, 2006, raw materials, fuel, power,
energy, supplies, machinery or tools or repair parts therefor or replacements
thereof, used directly in the drilling, extraction, refining, or processing of
natural gas or oil and the reclamation of the well area. For the purposes of
this section, the term "natural gas" shall mean "gas," "natural gas," and
"coalbed methane gas" as defined in § 45.1-361.1. For the purposes of this
section, "drilling," "extraction," "refining," and "processing" shall include
production, inspection, testing, dewatering, dehydration, or distillation of raw
natural gas into a usable condition consistent with commercial practices, and
the gathering and transportation of raw natural gas to a facility wherein the
gas is converted into such a usable condition. Machinery, tools and equipment,
or repair parts therefor or replacements thereof, shall be exempt if 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 well area
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 space facility,
space propulsion system, space vehicle, satellite, or space station of any kind
possessing space flight capability, including the components thereof,
irrespective of whether such facility, system, vehicle, satellite, or station
is returned to this Commonwealth for subsequent use, storage or consumption in
any manner when used to conduct spaceport activities; (ii) the sale, lease,
use, storage, consumption or distribution of tangible personal property placed
on or used aboard any orbital or suborbital space facility, space propulsion
system, space vehicle, satellite or space station of any kind, irrespective of
whether such tangible personal property is returned to this Commonwealth for
subsequent use, storage or consumption in any manner when used to conduct
spaceport activities; (iii) fuels of such quality not adapted for use in
ordinary vehicles, being produced for, sold and exclusively used for space
flight when used to conduct spaceport activities; (iv) the sale, lease, use,
storage, consumption or distribution of machinery and equipment purchased,
sold, leased, rented or used exclusively for spaceport activities and the sale
of goods and services provided to operate and maintain launch facilities,
launch equipment, payload processing facilities and payload processing
equipment used to conduct spaceport activities.
For purposes of this subdivision, "spaceport activities" means activities
directed or sponsored at a facility owned, leased, or operated by or on behalf of
the Virginia Commercial Space Flight Authority.
The exemptions provided by this subdivision shall not be denied by reason of a
failure, postponement or cancellation of a launch of any orbital or suborbital
space facility, space propulsion system, space vehicle, satellite or space
station of any kind or the destruction of any launch vehicle or any components
thereof.
2. That § 58.1-609.6 of the Code of Virginia is repealed.