Bill > AB486

This bill, effective immediately, adds Section 6377.4 to the Revenue and Taxation Code to exempt certain tangible personal property from sales and use taxes, aiming to stimulate California's manufacturing sector which has been declining. The exemption applies to qualified tangible personal property purchased for use in manufacturing, processing, refining, fabricating, or recycling, starting from when raw materials enter the process until the product is completed and packaged, and also includes property used in research and development. It also covers property purchased by contractors for use in construction contracts for qualified persons, and defines terms like "manufacturing" and "research and development" (which refers to activities defined in Section 174 of the Internal Revenue Code). The bill clarifies that "qualified persons" are those primarily engaged in specific manufacturing or research and development industries, as defined by the North American Industry Classification System (NAICS) codes, including new codes for scientific research and development services. The exemption has specific conditions, such as requiring an exemption certificate and not applying to local taxes or certain state taxes, and the property must remain in California and be used for its intended exempt purpose for at least three years to avoid liability for the tax.