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In North Carolina, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers. Several examples of exemptions to the state sales tax are prescription medications, some types of groceries, some medical devices, and machinery and chemicals which are used in research and development.
North Carolina generally does not require sales tax on Software-as-a-Service.
Stat. ? 105-164.1 et. seq. does not impose a sales tax on a retailer's net taxable sales or gross receipts derived from providing web hosting as of the date of this letter.
The NC Department of Revenue says that if you are selling anything at retail (and thus collecting sales tax thereon), and you provide repair, maintenance, or installation services with respect to that item sold at retail, you are a retailer and will collect sales tax on labor.
In the state of North Carolina, only computer software which meets certain descriptions is considered to be exempt. Sales of custom software - delivered on tangible media are exempt from the sales tax in North Carolina. Sales of custom software - downloaded are exempt from the sales tax in North Carolina.
Services in North Carolina are generally not taxable, with important exceptions. If the service you provide includes creating or manufacturing a product, you may have to deal with the sales tax on products.
Effective March 1, 2016, N.C. imposes a sales tax on repair, maintenance, and installation services. Optional computer software maintenance contracts with respect to prewritten software that only provide support services that meet the definition of repair, maintenance, and installation services are fully taxable,
When it comes to sales tax, the general rule of thumb has always been products are taxable, while services are non-taxable. Under that scenario, if your business sells coffee mugs, you should charge sales tax for those products.
Traditional Goods or Services Goods that are subject to sales tax in North Carolina include physical property, like furniture, home appliances, and motor vehicles. Prescription Medicine, groceries, and gasoline are all tax-exempt.
The North Carolina Department of Revenue issued a private letter ruling, concluding that subscription fees for a Software as a Service (SaaS) product are non-taxable. The taxpayer licenses a cloud-based SaaS platform for customer engagement and marketing, which customers access via the Internet.