Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule explains the application of the business
and occupation (B&O) and retail sales taxes to sales of imports and
exports. For purposes of this rule, the terms "good," "goods," "article," and
"articles" mean "tangible personal property."
(2)
Other rules that may apply.
Readers may want to refer to other rules for additional information, including:
(a) WAC
458-20-178
Use tax and the use of tangible personal property.
(b) WAC
458-20-193
Interstate sales of tangible personal property.
(3)
Definitions. The following
definitions apply throughout this rule:
(a)
"Export" means tangible personal property that originates within the taxing
jurisdiction of this state destined for delivery to a purchaser in a foreign
country. Exports do not include "ship's stores."
(i) Export sales require as a necessary
incident of the contract of sale, the seller to deliver the tangible personal
property by agreement:
(A) To the buyer at a
foreign destination; or
(B) To a
carrier consigned to and for transportation to a foreign destination;
or
(C) To the buyer at shipside or
aboard the buyer's vessel or other vehicle of transportation under
circumstances where it is clear that the process of exportation of the tangible
personal property has begun.
(ii) Exportation will not necessarily be
deemed to have begun if goods are merely in storage awaiting shipment, even
though there is reasonable certainty that the goods will be exported.
(iii) The intention to export, as evidenced,
for example, by financial and contractual relationships, does not indicate
"certainty of export" if the goods have not commenced their journey abroad;
there must be an actual entrance of the goods into the export stream.
(iv) In all circumstances there must be a
certainty of export and the process of export must have started. It is not
important that title and/or possession of the goods pass in this state so long
as delivery is made directly into the export channel.
(b) "Foreign commerce" means commerce that
involves the purchase, sale or exchange of property and its transportation from
a state or territory of the United States to a foreign country, or from a
foreign country to a state or territory of the United States.
(c) "Import" means tangible personal property
in import transportation.
(i) An "import"
includes goods that are still in the process of importation, i.e., while they
are still in import transportation. Except as provided in
RCW
82.04.460, property is in the process of
import transportation from the time the property begins its transportation at a
point outside of the United States until the time that the property is
delivered to the buyer in this state. Property is also in the process of import
transportation if it is merely flowing through this state on its way to a
destination in some other state or country.
(ii) An "import" does not include property
that is no longer in the process of import transportation.
(d) "Ship's stores" means the supplies and
equipment required for the operation and upkeep of a ship.
(4)
Business and occupation tax -
Wholesaling and retailing.
(a)
Imports. Sales of imports are subject to the B&O tax, except
for the following wholesale sales of imports:
(i) A sale of unroasted coffee beans;
or
(ii) A sale between a parent
company and its wholly owned subsidiary.
(b)
Exports. Sales of exports
are not subject to the B&O tax.
(i) To be
tax exempt , the seller must document the fact that it placed the goods into
the export process. This may be shown by the seller obtaining and keeping any
of the following documentation:
(A) A bona
fide bill of lading in which the seller is shipper/consignor and by which the
carrier agrees to transport the goods sold to the foreign buyer/consignee at a
foreign destination; or
(B) A copy
of the shipper's export declaration, showing that the seller was the exporter
of the goods sold; or
(C) Documents
consisting of:
(I) Purchase orders or
contracts of sale which show that the seller is required to get the goods into
the export stream, e.g., "f.a.s. vessel"; and
(II) Local delivery receipts, tripsheets,
waybills, warehouse releases, etc., reflecting how and when the goods were
delivered into the export stream; and
(III) When available, United States export or
customs clearance documents showing that the goods were actually exported;
and
(IV) When available, records
showing that the goods were packaged, numbered, or otherwise handled in a way
which is exclusively attributable to goods for export.
(ii) Thus, where the seller
actually delivers the goods into the export stream and retains such records as
above set forth, the B&O tax does not apply. It is not sufficient to show
that the goods ultimately reached a foreign destination; but rather, the seller
must show that it was required to, and did put the goods into the export
process.
(iii) Sales of tangible
personal property, of ship's stores, and supplies to operators of steamships,
etc., are not exempt irrespective of the fact that the property will be
consumed on the high seas, or outside the territorial jurisdiction of this
state, or by a vessel engaged in conducting foreign commerce.
However, under
RCW
82.04.433, a B&O tax deduction is
available for sales of fuel for consumption outside the territorial waters of
the United States by vessels used primarily in foreign commerce.
(A) To qualify for this deduction sellers
must take a certificate signed by the buyer or the buyer's agent stating: The
name of the vessel for which the fuel is purchased; that the vessel is
primarily used in foreign commerce; and, the amount of fuel purchased which
will be consumed outside of the territorial waters of the United States.
Sellers must exercise good faith in accepting such certificates and are
required to add their own signed statement to the certificate to the effect
that to best of their knowledge the information contained in the certificate is
correct.
(B) The following is an
acceptable certificate form:
Foreign Fuel Exemption Certificate
SELLER: .............. VESSEL: ..............
WE HEREBY CERTIFY that this purchase of (kind and amount of
product) from (seller) will be consumed as fuel outside the territorial waters
of the United States by the above-named vessel. We further certify that said
vessel is used primarily in foreign commerce and that none of the fuel
purchased will be consumed within the territorial boundaries of the State of
Washington.
DATED . . . . . , 20 . . . |
. . . . . . . . . . . . . . . . . . . . .
Purchaser |
. . . . . . . . . . . . . . . . . . . . .
Purchaser's Agent |
By: . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . |
. . . . . . . . . . . . . . . . . . . . .
Title or Office |
(C)
When a seller takes a completed certification such as this in good faith , the
sale is exempt from the B&O tax, whether made at wholesale or retail, and
even though the fuel is delivered to the buyer in this state.
(5)
Business and occupation tax - Extracting and manufacturing.
Persons engaged in extracting or manufacturing activities in Washington that
transfer or make delivery of articles produced to points outside the state are
subject to the B&O tax under the extracting or manufacturing classification
and are not subject to the B&O tax under the retailing or wholesaling
classification. See also WAC
458-20-135
and
458-20-136.
The activities taxed occur entirely within the state, are inherently local, and
are conducted prior to the commercial journey. The tax is measured by the value
of products as determined by the selling price. See WAC
458-20-112. It
is immaterial that the value so determined includes an additional increment of
value because the sale occurs outside the state.
(6)
Retail sales tax. The same
principles apply to the retail sales tax as are set forth for the business and
occupation tax described in subsections (4) and (5) of this rule, except that
certain statutory exemptions may apply. (See WAC
458-20-174,
458-20-175,
458-20-176,
458-20-177,
458-20-238
and
458-20-239.)
(7)
Use tax. The use tax is
imposed upon the use, including storage, of all tangible personal property
acquired for any use or consumption in this state unless specifically exempt by
statute.
Statutory Authority:
RCW
82.32.300. 86-07-005 (Order ET 86-3), §
458-20-193C, filed 3/6/86; 83-07-033 (Order ET 83-16), § 458-20-193C,
filed 3/15/83; Order ET 76-3, § 458-20-193C, filed 8/31/76; Order ET 70-3,
§ 458-20-193C (Rule 193 Part C), filed 5/29/70, effective
7/1/70.