"Foreign commerce" means a business venture between persons in the United States and those in a foreign country.
"High seas" means that portion of the ocean which is beyond the territorial jurisdiction of the United States. It does not include the Chesapeake Bay, intercoastal waterways, or inland rivers or waterways.
"Intercoastal trade" means the exchange of goods or commodities between ports.
"Interstate commerce" means a business venture between the people of two states.
"Principally" means more than 50%.
"Used directly" means those items that are both indispensable to the building, conversion, or repair process and which are used as an immediate part of such process. See 23VAC10-210-920 for further explanation of this term.
Dredges and attendant vessels, such as barges upon which silt from the dredging process is loaded, are entitled to the exemption set forth in this subsection and subsection C provided they are principally used in the dredging of interstate waterways. Vessels not physically involved in the dredging of an interstate waterway, such as crew boats, survey boats, and barges used to move equipment, materials, and employees from the dredging site, are subject to the tax.
See 23VAC10-210-920 for further description of the manufacturing/processing exemption.
For repairs to ships or vessels not meeting the interstate or foreign commerce or plying the high seas requirements, see 23VAC10-210-3050.
Fuel for the propulsion or operation of equipment and supplies for use aboard ships or vessels plying the high seas, either (i) in intercoastal trade between ports in this state and ports in other states of the United States or its territories or possessions, or (ii) in foreign commerce between Virginia ports in this state and ports in foreign countries are exempt from the tax when delivered directly to such ships or vessels.
Fuel used to operate machinery and equipment which is not an integral part of and supplies purchased for use on ships or vessels which do not ply the high seas in intercoastal trade or foreign commerce, such as dredges or barges, is taxable. When fuel is used in both taxable and exempt activities, the tax due is prorated between the percentage of use in taxable and exempt activities. For example, fuel used in engines to both propel a dredge and to operate equipment on such is taxable based upon the percentage of usage in operating the equipment.
23 Va. Admin. Code § 10-210-4050
Statutory Authority
§§ 58.1-203 and 58.1-609.3(4) of the Code of Virginia.