Washington ~ Multiple Taxes: Governor Signs Revenue Legislation

Gov. Jay Inslee has signed excise tax legislation, including new sections covering business and occupation tax (B&O) exemption for agricultural fertilizer and seed, as well as tax relief for silicon smelters. Other highlights include:

Tax credits provided to businesses in main street communities to promote contributions to main street programs and enhance community and economic revitalization;

Rate reduction for semiconductor materials manufacturing expires December 1, 2028 (formerly December 1, 2018);

Tax exemption for property used in manufacturing semiconductor materials expires January 1, 2024;

Manufacturers of semiconductor microchips are exempt from business and occupation tax until January 1, 2024;

Preferential rate for the solar silicon industry is scheduled to expire July 1, 2027 (formerly June 30, 2017); and

No credit may be earned for contributions made on or after July 1, 2027 (formerly July 1, 2017) to the Washington motion picture competitiveness program.

The sales and use tax exemptions for gases and chemicals acquired by a manufacturer for the production of semiconductor materials is extended to December 1, 2028. A person claiming the tax preference must repay fifty percent of the amount of the preference if the number of persons employed by a person claiming the preference is less than ninety percent of the three-year average.

The sales and use tax exemptions for gases and chemicals used in the production of semiconductor materials and for tangible personal property incorporated into buildings used for semiconductor material manufacturing which are contingent upon the siting of a significant semiconductor fabrication facility in Washington, expire January 1, 2024, unless the contract for such a facility is signed by January 1, 2024.

A silicon smelter that uses manufactured or natural gas delivered directly through a pipeline is exempt from brokered natural gas use tax.

The Invest in Washington Program that provides a sales and use tax deferral on certain construction and expenditure costs is amended to apply to up to two manufacturing facilities. One is required to be located in eastern Washington, and one must be located in western Washington. The program expires January 1, 2026.

Martial arts is excluded from the definition of “retail sale” for purposes of the retail sales tax and the retailing B&O tax, unless it is held at an athletic or fitness facility.

Subscribers may view the governor’s veto message.

SB5977VetoMsge

S.B. 5977, Laws 2017, effective October 19, 2017

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