News and Insights

Utah Sales and Use Tax: Partial Exemption for Drilling Equipment Manufacturer; County Sales and Use Tax

Tax Development Apr 06, 2015

Drilling Equipment Manufacturer
Utah Senate Bill 182 (“S.B. 182”) created a partial sales and use tax exemption for certain purchases or leases made by a drilling equipment manufacturer. A drilling equipment manufacturer is defined as a facility: (a) located in Utah; (b) where 51% or more of the manufacturing activities of the facility involve manufacturing component parts of drilling equipment; (c) that uses pressure of 800,000 or more pounds per square inch as part of the manufacturing process; and (d) that uses a temperature of 2,000 or more degrees Fahrenheit as part of the manufacturing process.

The exemption applies to machinery, equipment, materials, or normal operating repair or replacement parts that are used or consumed exclusively in the drilling equipment manufacturer’s manufacturing process. The exemption is effective beginning July 1, 2015 and ends on June 30, 2017. In order for a drilling manufacturer to claim the exemption, it must file for a refund of 50% of the tax paid on the amounts paid or charged.

County Sales and Use Tax
Utah House Bill 362 (“H.B. 362”) permits a county to impose a sales and use tax at the rate of .25% on transactions that occur or are sourced to the county. The tax collected is to be used for highways and public transit within the county. H.B. 362 is effective July 1, 2015.


Jeremiah T. Lynch