Louisiana adopts digital-tools sales-tax exemption rule

Commercial use alone is insufficient

The general business exemption requires exclusive commercial use, direct use in producing customer goods or services, and an output subject to sales and use tax or insurance-premium tax. The statute excludes software and software-access services not directly involved in producing that output. A multinational group’s ordinary business purpose does not, by itself, establish eligibility.^[1][2]

The rule defines direct production by reference to creating the final saleable output. It excludes back-office and support functions, including business management, scheduling, accounting, inventory and project management, communications and analytics. Efficiency or productivity benefits do not turn those applications into exempt production tools.^[1]

Internal products and sector rules

A digital product created solely for its creator’s business needs, and not of a type it offers for sale, remains exempt from use tax. Purchased tools used to create it remain taxable: the rule distinguishes an in-house training video from the purchased software-access service used to make it.^[1][2]

Separate statutory provisions cover specified customer-information, transaction, investment, lending, security and compliance tools used by FDIC-insured institutions and covered group entities. Healthcare relief covers qualifying clinical or health-information uses. The rule defines eligible licensed healthcare providers and confirms that tools protecting patient-data transmission or storage can qualify.^[1][2]

Preserve certificate and return coding

The Department’s return instructions identify Form R-85011 and exemption code 5112 for R.S. 47:305.12 purchases; its reviewed exemption certificate directs dealers to Schedule A-1. Exemption does not mean omitting the transaction from the return. The ordinary state framework still requires qualifying dealers to register, collect and file, with returns and payment due by the twentieth day after the monthly or quarterly reporting period. The new rule creates no separate filing deadline.^[3][4]

Groups should classify Louisiana software and SaaS expenditure by actual function, distinguish direct production from support applications, and retain the evidence supporting any sector exemption and return coding. An internal-use label should not be used to exempt the purchased software that created an otherwise exempt internal product.^[1][2][3]