BUS-42 - Qualifying for the Manufacturing Exemption

To qualify for the manufacturing exemption, a taxpayer must meet each of the requirements listed below.

  • A business must qualify for the exemption on a per location basis.
  • The business must be engaged in one of the activities described under Division D of the SIC Index or be otherwise primarily engaged in fabricating and processing tangible personal property for resale and consumption off the premises.
  • More than 50% of the business’s gross receipts must be derived from sales of product manufactured at same location.
  • The sales of the manufactured products must be made from the manufacturing location or from a storage or warehouse facility located within a ten-mile radius of the manufacturing location. Location includes any adjoining buildings and any buildings on the same parcel of land that, combined, make up a manufacturing campus.

If a business qualifies as a manufacturer, sales made from the qualified location of items not manufactured at that location but incidental to the business’s manufacturing sales are also exempt.

If a business location qualifies for exemption, the business will not register the location or get a business license for the location.

Reference: Tenn. Code Ann. § 67-4-712(b)(2); Tenn. Comp. R. & Regs. 1320-04-05-.16.

Note: This article was updated on May 12, 2023, as a result of a law change. The previous version of BUS-42 is available here.

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