H117 - North Carolina Competes Act, Parts III-VI: Sales Tax Changes (SL 2015-259)

Session Year 2015

Overview: Parts III through VI of S.L. 2015-259 make the following sales tax changes:

  • Datacenter Infrastructure Act. - Part III creates a sales tax exemption for datacenters investing at least $75M within a 5-year period for sales of datacenter equipment and electricity located and used at the datacenter. The exemption becomes effective January 1, 2016, and applies to sales made on or after that date.
  • Sales Tax Relative to Aviation. - Part IV (i) extends for 4 years the sales tax refund available to interstate passenger air carriers for sales tax paid on fuel in excess of $2.5M; (ii) exempts from sales tax fuel sold to an interstate air business for use in a commercial aircraft, effective January 1, 2016, taxes remaining sales of aviation gasoline and jet fuel at 7%, and earmarks the revenue from the tax to the Division of Aviation, Department of Transportation; (iii) increases the sales tax rate on aircraft and tax qualified jet engines at 4.75% with a maximum tax of $2,500, effective October 1, 2015; and (iv) exempts service contracts and repairs, maintenance, and installation services on qualified aircraft and qualified jet engines from sales tax, effective October 1, 2016.
  • Exempt Motor Vehicle Service Contracts from Sales Tax. - Part V exempts service contracts on motor vehicles from sales tax. As part of the budget bill, S.L. 2015-241 (H97), sales tax is imposed on repair, maintenance, and installation services. The taxation of this service mitigates the need to impose the tax on service contracts and eases the administrative issues associated with the sales tax on service contracts for motor vehicles. This Part becomes effective March 1, 2016.
  • Extend Sales Tax Preference for Motorsports Parts and Fuel. - Part VI, as amended by S.L. 2015-261, extends the current sales tax preferences for motorsports from January 1, 2016, to January 1, 2020, and clarifies the current sales tax on race engines and service contracts on items used by a professional motorsports racing team.

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