OTC Rules Regarding Manufacturing...
“Manufacturing” means and includes the activity of converting or conditioning tangible personal
property by changing the form, composition, or quality of character of some existing material or materials,
including natural resources, by procedures commonly regarded by the average person as manufacturing,
compounding, processing or assembling, into a material or materials with a different form or use.
“Manufacturing” does not include extractive industrial activities such as mining, quarrying, logging,
and drilling for oil, gas and water, nor oil and gas eld processes, such as natural pressure reduction,
mechanical separation, heating, cooling, dehydration and compression.
[68 O.S.Supp.2003, § 1352(13)]
“Manufacturing operation” means the designing, manufacturing, compounding, processing,
assembling, warehousing, or preparing of articles for sale as tangible personal property. A manufacturing
operation begins at the point where the materials enter the manufacturing site and ends at the point
where a nished product leaves the manufacturing site. “Manufacturing operation” does not include
administration, sales, distribution, transportation, site construction, or site maintenance. Extractive activities
and eld processes shall not be deemed to be a part of a manufacturing operation even when performed
by a person otherwise engaged in manufacturing.
[68 O.S.Supp.2003, § 1352(14)]
“Manufacturing site” means a location where a manufacturing operation is conducted, including
a location consisting of one or more buildings or structures in an area owned, leased, or controlled by
[68 O.S.Supp.1998, Section 1352(11)] It is not required that the building or structures
owned, leased, or controlled by a manufacturer be located on a single tract of land or on contiguous tracts
(7) “Predominant or predominantly” means the most frequent or for the most part.
(8) “Sales” means the activities involved in selling a manufacturer’s goods to others, and includes
advertising or marketing, printing, preparation, and distribution of catalogs and yers, and product
exhibition and promotion.
(9) “Site construction” means the construction of buildings and other structures and improvements to
real property. The term includes land preparation, new construction, reconstruction, remodeling, renovation,
repair, upgrading and making alterations and additions to the real property, whether the work is done by the
manufacturer or by other rms.
(10) “Site maintenance” means the provision of facilities support services as dened in the North
American Industry Classication System, Code 561210. “Site maintenance” does not include items used
in the manufacturing operation, as dened in this Section, or in waste disposal activities resulting from the
(11) “Transportation” means to move or carry tangible personal property to a manufacturing site, prior
to the time it enters into the manufacturing process, and to move or carry, tangible personal property from
a manufacturing site, after such property leaves the manufacturing operation. The term “transportation”
includes the purchase, maintenance, repair, overhaul, rebuilding, storage and operation of vehicles and
(b) Activities included in manufacturing operations. Purchases by a manufacturer of tangible personal
property or services for use in a manufacturing operation are exempt from sales and use taxes in Oklahoma.
Operations performed by a sub-contractor to the manufacturer may also qualify as a manufacturing operation
if the contractor is performing sub-assembly work leading to completion of the nished product. Activities
included in a manufacturing operation include the following:
(1) Product development. Examples of property used in product development include raw materials,
machinery, and equipment utilized in designing and making prototypes.