Business Sales Tax
This information is designed to assist business people and people thinking about operating a business in Oklahoma. What follows is meant to be basic, introductory information and should not be considered the final word in business taxes in Oklahoma. For further information, please contact one of our Taxpayer Assistance Offices or attend one of our Business Tax Workshops.
Oklahoma State Sales Tax is levied at 4.5 percent of the gross receipts from the sale or rental of tangible personal property and from the furnishing of specific services, including printing and advertising (except in newspapers, periodicals, and on billboards, as well as any advertising through the electronic broadcast media, including radio, television and cable television), transportation and auto parking, admissions, lodging and meals, telephone service and the furnishings of other public utilities, such as electricity and natural gas, with the exception of water. State sales tax does not apply to electricity or natural gas utility bills for residential property but remain subject to any applicable municipal and county taxes in effect at the time of sale. The furnishing of natural or artificial gas and electricity for commercial use, such as retail stores, warehouses, etc, is subject to state, city and county sales tax. Natural gas and electricity used directly in the manufacturing process is exempt if the manufacturing company holds an exemption certificate.
The amount of sales tax a seller is required to collect constitutes a debt owed by the purchaser to the tax-levying authority. The seller, acting as trustee, is allowed to retain one percent, up to $2500.00, per reporting period of the remitted tax as compensation for keeping records, filing reports and remitting tax, provided it is remitted on a timely basis.
There are several other exemptions from sales tax, including general exemptions, agricultural exemptions and tax-exempt from sales tax. Prescription drugs for human consumption are exempt from sales tax. This exemption does not apply to proprietary or patent medicines.
Oklahoma law allows incorporated cities and towns to levy sales taxes for general and specific purposes of municipal government. Local tax ordinances must be approved by a majority vote in a citywide election. There is presently no maximum local rate that may be levied by cities and towns.
Counties may levy a county sales tax not to exceed 2 percent. The county sales tax is in addition to the existing 4.5 percent state and applicable municipal tax.
Municipalities and counties can form a transportation trust and elect to have a tax not to exceed 2 percent to be deducted for building roads. This tax is in addition to city and county sales tax.
Sales tax permits require a $20 fee with additional locations costing $10. The license is renewable every three years from the date the permit was issued, if the business is in good standing.
City and county hospitals may form hospital trusts and elect to have a tax not to exceed 2 percent for the specific use of the hospitals.
Certain businesses may obtain a Direct Pay Permit for $20 every three years. This permit allows those businesses making purchases of at least $800,000 per year to pay sales and use tax liabilities, without discount, directly to the OTC instead of to the vendor when making purchases.
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