North Carolina has enacted a law authorizing alcoholic beverage manufacturers to claim an exemption from sales and use tax on qualifying items. The law went into effect on October 1, 2021. To be eligible for the exemption, manufacturers must hold either an unfortified winery, fortified winery, brewer, or distillery permit. The exemption applies to machinery, equipment, parts, and accessories used to manufacture alcoholic beverages, as well as supplies and ingredients used or consumed in the manufacturing process. Tax exempt items must be primarily used in the production phase of the manufacturing process. Sales of taxable items used in the distribution or administration phases are not exempt because they are not primarily used in the manufacture of alcoholic beverages.
Manufacturers who purchase items qualifying for the exemption must provide the seller with a properly completed exemption certificate. In addition, the buyer must maintain records demonstrating that purchased items qualify for the exemption.