2020 Arizona Revised Statutes
Title 42 - Taxation
§ 42-6012 Municipal transaction privilege tax; sales of electricity, natural gas or liquefied petroleum gas
42-6012. Municipal transaction privilege tax; sales of electricity, natural gas or liquefied petroleum gas
A city or town that levies a transaction privilege, sales, gross receipts, use, franchise or other similar fee or tax, however denominated, on the business of producing, providing or furnishing electricity, electric lights, current, power, natural gas or liquefied petroleum gas shall either tax or exempt in whole the gross proceeds of sales or gross income from sales by those businesses to either of the following businesses:
1. A qualified manufacturing or smelting business located in that city or town. A utility that claims this deduction shall report each month, on a form prescribed by the department, 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 processing, fabricating, job printing, 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. Businesses that operate an international operations center in this state and that are certified by the Arizona commerce authority pursuant to section 41-1520.
