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SMART TAX USA - Georgia Manufacturer's Exemption Certificate

In Georgia the state sales and use tax rate is 4%. There are 159 counties in Georgia and each county levies a local sales and use tax ranging from 1% to 3%. The City of Atlanta has an additional 1% municipal option sales tax. Sales and use taxes are imposed on all retail sales and taxable services, and they are also applicable to tangible personal property purchased on the Internet and delivered to an address in Georgia regardless of where the vendor is located.

According to Georgia Department of Revenue’s Rule 560-12-2-.62 entitled Manufacturing Machinery and Equipment, manufacturing production machinery is exempt from state and local sales tax if it is necessary and integral to the manufacture of tangible personal property. Machinery or components purchased to upgrade or replace existing machinery are also exempt from state and local sales tax. This exemption also covers re-manufacturing of aircraft engines and components, primary material handling equipment in warehouses and distribution centers if the taxpayer invests at least $5 million in a new or expanded facility, and computer equipment purchased or leased by high technology companies for use at their facilities if the total purchase or lease value exceeds $15 million. Electricity consumed directly in a manufacturing process is exempt from taxation if the total cost for such electricity is more than 50% of the cost for all materials used to manufacture the product.

To qualify for Georgia’s Manufacturing Machinery and Equipment Exemption Certificate, the property purchased or leased must possess the character of machinery or equipment at the time of sale or lease, or consist of components which when assembled will have the character of machinery or equipment. Property purchased or leased must be used in a manufacturing plant and be necessary and integral to the manufacture of tangible personal property for sale or further manufacturing, and either be used for the first time in a new or existing manufacturing plant in Georgia or replace or upgrade machinery or equipment in an existing manufacturing plant.

Georgia State Sales Tax Exemptions for Manufacturing Machinery and Equipment

Examples of machinery or equipment that will usually be deemed necessary and integral to the manufacture of tangible personal property in Georgia include:

• conveyance machinery used to transport materials within or among manufacturing plants, or to a distribution or storage point at the manufacturing plant

• machinery or equipment used to gather, arrange, sort, mix, measure, blend, heat, cool, clean or otherwise treat, prepare or store industrial materials for further manufacturing

• machinery or equipment used to control, regulate, heat, cool or produce energy for other machinery or equipment that is necessary and integral to the manufacture of tangible personal property

• testing and quality control equipment

• cleaning machinery or equipment used to maintain exempted machinery or equipment

• equipment used to provide safety for employees who work at a manufacturing plant

• pollution control machinery or equipment

• machinery or equipment used in quarrying and mining activities

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