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Sales and Use Tax
Sales and Use Tax
Sales and use taxes are applied to all businesses enjoying legal existence within the State. The general retail sales tax rate is 7%; other sales tax rates vary based upon the types of transactions. The following list details some of the more specific sales taxes relative to manufacturers.

Sales to a Manufacturer:

1. Raw materials (except sand and gravel, 5 cents per ton). RATE - 0%
2. Catalysts, chemicals, or gases used directly in processing (except natural gas, 1.5%). RATE - 0%
3. Packing and containers for sale with finished goods. RATE - 0%
4. Machinery and parts used directly in manufacturing and port operations (purchase or rental). RATE - 1.5%
5. Industrial electricity, natural gas, and fuels. RATE - 1.5%
6. Industrial water. RATE - 7%
7. Telephone and telegraph. RATE - 7%
8. All other equipment, furniture, fixtures, materials, supplies, and rentals not used directly in manufacturing. RATE - 7%
9. Contract construction for projects over $10,000 (except residential). RATE - 3.5%
10. Construction materials and new machinery or equipment not used directly in the manufacturing process. RATE - 3%
11. Purchase of machinery and equipment that is used directly in the manufacturing process, provided that the purchases are made directly from a supplier and not through a contractor. RATE - 0.75%

Sales by a Manufacturer:

1. To final consumer or user. RATE - 7%
2. To another manufacturer for use as manufacturing machinery. RATE - 1.5%
3. To another manufacturer as a raw material for further processing. RATE - 0%
4. To a wholesaler or retailer for resale. RATE - 0%
5. To exempt customers (e.g., government agencies, educational institutions, etc.). RATE - 0%

A use tax applies to personal property purchased in another state but utilized in Mississippi. The use tax is computed by applying the state sales tax rate applicable to that type of property less credit allowed for sales or use taxes paid in the state of purchase. Used property is generally taxed on the basis of its book value figured on straight line depreciation.