The Free Port Exemption is an inventory exemption for Georgia manufacturers, wholesalers, and distributors. This valuable exemption encourages manufacturing and other basic industries to locate, invest and/or remain in Georgia. The citizens of each county in Georgia vote on whether the exemption rate is 20, 40, 60, 80 or 100 percent of the inventory value. Georgia competes fiercely with states like Alabama and South Carolina that exempt ALL inventories. Make Georgia Earn Your Tax Dollars and Your Business!
Inventory Eligible for Free Port Exemption
- Raw materials and work-in-progress inventory of Georgia manufacturers. Raw materials are components that change significantly during manufacturing or processing to create a new product. Raw materials can be grains, minerals, and oil or items such as wheels, nuts, bolts, or wheels.
- Georgia manufacturers’ finished goods inventory held for less than 12 months. Most manufacturers have inventory on hand for more than 12 months from the date of manufacture. Possible exceptions include companies that build to order or use a just-in-time inventory system.
- Finished goods inventory stored for less than 12 months in a warehouse, dock, or wharf, with a final destination outside of Georgia. Carriers, distributors, and wholesalers generally qualify for the exemption under this provision.
- Retail inventory does not qualify for this exemption (yet)! On April 17, 2012, Governor Nathan Deal signed HB 48-Freeport Expansion and Local Inventory Removal tax. This created a Tier 2 Freeport exemption that applies to ALL business inventory that did not qualify for the Tier 1 Exemption. In other words, retail inventory may soon be exempt in Georgia. However, local governments must first call a referendum to approve the Tier 2 Waiver and determine the waiver rates. Other ineligible items include fuel, packaging supplies, office supplies, replacement parts, retailer business inventory, and unreclaimed or unextracted natural resources.
Free Port Exemption Process
The first step in qualifying for the waiver is to complete the Freeport Waiver Application (PT-50PF). Many Georgia businesses lose Freeport because they are unaware of the waiver or miss the deadlines. Please note that the burden of obtaining, completing and submitting the Freeport application form rests entirely with the taxpayer.
An assessor from the Office of Tax Assessors will typically schedule a site visit for first-time applicants to confirm business purpose and location. This necessary second step allows the county assessor to gather first-hand information about the business. The site visit can be an excellent opportunity to ask questions about the exemption, to clarify any issues, or for your tax advisor to meet with the assessor.
Lastly, the Office of Tax Advisors will notify you once the Board of Tax Advisors approves the submitted Freeport application. This approval does not mean that Freeport’s statement will be accepted as filed. If there are errors, inconsistencies, or insufficient documentation on the form, the exemption may be reduced or eliminated.
As Georgia recovers from the economic downturn, entrepreneurs are looking for ways to reinvest in their businesses while minimizing taxes. The Freeport Exemption is an incentive that can complement your overall business tax strategy. Don’t leave money on the table!
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