GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1989

H	1 

HOUSE BILL 1944

Short Title:  Foreign Tourist Tax Exemption.	(Public)
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Sponsors: Representative Redwine.
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Referred to:  Commerce.
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May 10, 1989

A BILL TO BE ENTITLED
AN ACT TO PROMOTE INTERNATIONAL TOURISM IN NORTH CAROLINA BY PROVIDING A TAX INCENTIVE FOR FOREIGN TOURISTS TO PURCHASE NORTH CAROLINA PRODUCTS.
Whereas, the State of North Carolina, with its many attractions, has the opportunity to generate additional revenue in the form of international tourism; and
Whereas, foreign visitors to the United States represent a more lucrative market than domestic travelers because they use tourism services to a much greater degree than their domestic counterparts; and
Whereas, many foreign countries have a value-added tax refund system for purchases of tangible personal property by international travelers which has proved successful, when appropriately advertised, in increasing tourism in those countries; and
Whereas, a similar sales tax exemption program applicable to retail shopping by international visitors can be an effective promotional tool to increase North Carolina's share of the growing foreign tourism market; Now, therefore,
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-164.13 is amended by adding a new subdivision to read:
"(33a)	Tangible personal property, other than food for immediate consumption and other perishable items, purchased from a qualified retailer by a foreign tourist for export to a foreign country.  The exemption applies only to the first twenty-five dollars ($25.00) of tax for which exemption is claimed and is subject to the requirements provided in G.S. 143B-436.1.  For the purpose of this subdivision, the term ‘foreign tourist' means an individual traveling with a foreign passport, a current United States visa, and a round-trip international transportation ticket of less than three months' duration.  The term does not include a resident alien or foreign student living in the United States.  For the purpose of this subdivision, a qualified retailer is a retailer who is a participant in the Foreign Tourist Tax Incentive Program provided in G.S. 143B-436.1.  A qualified retailer who makes a sale subject to the exemption provided in this subdivision shall file a copy of the form obtained pursuant to G.S. 143B-436.1 with the retailer's next sales and use tax report for the month during which the sale is made."
Sec. 2.  Part 2 of Article 10 of Chapter 143B of the General Statutes is amended by adding a new section to read:
"§ 143B-436.1.  Foreign tourist tax incentive program.
(a)	Program Established.  The Department of Commerce shall administer a Foreign Tourist Tax Incentive Program to promote the use of the sales tax exemption provided in G.S. 105-164.13(33a) for tangible personal property purchased from a participating retailer by a foreign tourist for export to a foreign country.  The Department may adopt rules to implement the provisions of this section.  For the purpose of this section the term ‘foreign tourist' means an individual traveling with a foreign passport, a current United States visa, and a round-trip international transportation ticket of less than three months' duration.  The term does not include a resident alien or foreign student living in the United States.
(b)	Participating Retailers. In order to participate in the Foreign Tourist Tax Incentive Program, a retailer shall file an application on a form provided by the Department and shall pay an annual fee of fifty dollars ($50.00) for each participating place of business at a separate location.  The Department shall supply each participating retailer with signs or decals to identify the retailer as a participating retailer and instructions to ensure  that the retailer complies with the requirements of the program.
(c)	Guide to Participating Retailers.  The Department of Commerce shall semiannually compile and publish a guide to participating retailers.  The guide shall be organized by location and shall identify the name, type of business, and address of each participating retailer.  The guide shall include instructions for foreign tourists for obtaining the tax exemption provided in G.S. 105-164.13(33a).  The Department shall distribute copies of the guide to welcome centers, tourist bureaus, and other locations foreign tourists are likely to visit.
(d)	Exemption Booklets. In order to qualify for the tax exemption provided in G.S. 105-164.13(33a), the foreign tourist must obtain an exemption booklet from the Department of Commerce.  A foreign tourist who applies for the booklet shall provide such information and evidence regarding the tourist's passport, visa, transportation, and other matters as the Department may require.  Upon receipt of a complete application, the Department shall issue the foreign tourist an exemption booklet valid for the duration of the foreign tourist's stay in this country.  The booklet shall contain the foreign tourist's name and passport number and the date the booklet will expire.  The booklet shall provide appropriate space, including carbon copies, for retailers to enter the required information when making a sale subject to the exemption.  No more than one booklet may be issued to a foreign tourist during each visit to this country; if the booklet is lost or destroyed, it may not be replaced.
(e)	Procedure for Claiming Exemption.  In order to claim the exemption, the foreign tourist shall present the exemption booklet to a participating retailer before making a purchase.  The retailer shall verify that the person presenting the booklet is the foreign tourist identified in the booklet and that the booklet has not expired.  The retailer shall enter the date of the sale, the items sold, the sales price, and the amount of tax to which the exemption applies.  The foreign tourist shall then sign a statement verifying that the tourist will take the items purchased out of the country.  The retailer shall retain a copy of this information and file it with the retailer's next sales and use tax report for the month during which the sale is made.
When the foreign tourist claiming the exemption presents the exemption booklet to the retailer, the retailer shall examine the previous entries to determine the amount of tax for which exemption has been claimed.  The retailer may not allow an exemption for any amount which, when added to the amounts of tax for which the exemption has already been claimed, exceeds twenty-five dollars ($25.00).
(f)	Use of Fees.  The revenue derived from the fees provided in this section shall be appropriated annually by the General Assembly to defray the cost to the Department of Commerce of administering and promoting the Foreign Tourist Tax Incentive Program."
Sec. 3.  There is appropriated from the General Fund to the Department of Commerce, Division of Travel and Tourism, the sum of $25,000 for the 1989-90 fiscal year to administer and promote the Foreign Tourist Tax Incentive Program provided in this act.
Sec. 4.  Section 1 of this act shall become effective January 1, 1990.  The remainder of this act shall become effective July 1, 1989.