006.05.06 Ark. Code R. 005-GR-56

Current through Register Vol. 49, No. 10, October, 2024

Rule 006.05.06-005-GR-56 - EXEMPTIONS FROM TAX - MANUFACTURING EXEMPTION - DIES AND MOLDS

A. The gross receipts derived from the sale of molds and dies are exempt if:

1. The molds or dies are used directly in manufacturing; and

2. The molds or dies determine the physical characteristics of the finished product or its packaging material.

B. Machinery and equipment used by a manufacturer to produce or repair replacement dies, molds, repair parts, or replacement parts used or consumed in the manufacturer's own manufacturing process is not exempt from gross receipts tax as manufacturing machinery and equipment.

C. Forms constructed of plaster, cardboard, fiberglass, natural fibers, synthetic fibers or composites thereof which determine the physical characteristics of a product and which are destroyed or consumed during the manufacture of the product are exempt from gross receipts tax.

D. The gross receipts derived from the service of cleaning or repairing a mold or die are subject to gross receipts tax. The gross receipts or gross proceeds derived from the service of altering or modifying an existing die or mold in order to accommodate design or product changes are exempt from the gross receipts tax.

E. The gross receipts derived from the replacement of any item that was originally exempt as a die or mold, or any of its component parts, shall be exempt from the gross receipts tax.

1. "Mold" means the following:

a. A frame on or around which a product is constructed and which is designed to cause the product to take on a specific shape;

b. A cavity into which raw materials such as metal, glass, rubber, plastic, resin or other substances are packed, poured, or injected, sometimes under pressure, or through which materials are passed, the result of which is a product whose size or shape is directly attributable to that of the cavity; or

c. A form that is used to give a product a distinctive size or shape.

2. "Die" means a tool or device that is attached to, or part of, a unit of machinery and that imparts a predetermined and distinctive shape, pattern, texture, or finish to a material or impresses an object or material, including any replacement tooling that performs the intended function.

G. The following are examples of molds or dies:

1. Cutting or shaping tools that when moved toward each other or another component of a machine impart a desired physical characteristic to an object by pressure or by a blow;

2. Taps and internally threaded screw-cutting tools used for forming threads;

3. Perforated blocks through which material is drawn or extruded for shaping;

4. Die blocks and inserts and other devices attached to a die block and used during the manufacturing process; and

5. Printing plates.

H. The following are examples of items that are NOT molds or dies:

1. Tools such as grinding wheels, sanding belts and disks, and saw blades;

2. Stencils that are not part of a more complex die unit or machine; and

3. Hand tools.

006.05.06 Ark. Code R. 005-GR-56

Ark. Code Ann. §§ 26-52-402; 26-52-422