Arizona Practice and Procedure

Arizona does not impose a sales tax. It imposes a transaction privilege tax on the seller for the privilege of doing business, and that distinction changes who bears the exposure, how exemptions are claimed, and why the cities, taxing under their own Model City Tax Code, do not always follow the state's rules. This hub collects the questions that recur for businesses operating in the state.

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Local and district taxes

Does Arizona's transaction privilege tax exempt machinery and equipment used in manufacturing?Arizona's transaction privilege tax is a tax on the seller for the privilege of doing business, not a tax on the purchaser's transaction, and that framing changes who carries exposure when a manufacturing exemption is claimed incorrectly. Machinery and equipment used directly in manufacturing, processing, fabricating, job printing, refining, or metallurgical operations can be deducted from the retail classification tax base and is separately exempt from use tax, but the deduction has never reached consumables, most spare parts, or pollution control equipment, which sits under its own statutory provision. City transaction privilege tax under the Model City Tax Code does not simply mirror the state deduction, so a purchase that is clean at the state level can still be exposed at the city level.