                                 CODE OF VIRGINIA

 LIMITATION ON RATE OF LICENSE TAXES (§ 58.1-3706)

A. Except as specifically provided in this section and except for the fee
authorized in § 58.1-3703, no local license tax imposed pursuant to the
provisions of this chapter, except §§ 58.1-3712 and 58.1-3713, or any other
provision of this title or any charter, shall be imposed on any person whose
gross receipts from a business, profession or occupation subject to licensure
are less than: (i) $100,000 in any locality with a population greater than
50,000; or (ii) $50,000 in any locality with a population of 25,000 but no more
than 50,000. Any business with gross receipts of more than $100,000, or $50,000,
as applicable, may be subject to the tax at a rate not to exceed the rate set
forth below for the class of enterprise listed:

   1. For contracting, and persons constructing for their own account for sale,
   sixteen cents per $100 of gross receipts;

   2. For retail sales, twenty cents per $100 of gross receipts;

   3. For financial, real estate and professional services, fifty-eight cents per
   $100 of gross receipts; and

   4. For repair, personal and business services, and all other businesses and
   occupations not specifically listed or excepted in this section, thirty-six
   cents per $100 of gross receipts.
   				The rate limitations prescribed in this section shall not be applicable to
   license taxes on (i) wholesalers, which shall be governed by &#xA7; 58.1-3716;
   (ii) public service companies, which shall be governed by &#xA7; 58.1-3731;
   (iii) carnivals, circuses and speedways, which shall be governed by &#xA7;
   58.1-3728; (iv) fortune-tellers, which shall be governed by &#xA7; 58.1-3726;
   (v) massage parlors; (vi) itinerant merchants or peddlers, which shall be
   governed by &#xA7; 58.1-3717; (vii) permanent coliseums, arenas, or
   auditoriums having a maximum capacity in excess of 10,000 persons and open to
   the public, which shall be governed by &#xA7; 58.1-3729; (viii) savings
   institutions and credit unions, which shall be governed by &#xA7; 58.1-3730;
   (ix) photographers, which shall be governed by &#xA7; 58.1-3727; and (x)
   direct sellers, which shall be governed by &#xA7; 58.1-3719.1.

B. Any county, city or town which had, on January 1, 1978, a license tax rate,
for any of the categories listed in subsection A, higher than the maximum
prescribed in subsection A may maintain a higher rate in such category, but no
higher than the rate applicable on January 1, 1978, subject to the following
conditions:

   1. A locality may not increase a rate on any category which is at or above the
   maximum prescribed for such category in subsection A.

   2. If a locality increases the rate on a category which is below the maximum,
   it shall apply all revenue generated by such increase to reduce the rate on a
   category or categories which are above such maximum.

   3. A locality shall lower rates on categories which are above the maximums
   prescribed in subsection A for any tax year after 1982 if it receives more
   revenue in tax year 1981, or any tax year thereafter, than the revenue base
   for such year. The revenue base for tax year 1981 shall be the amount of
   revenue received from all categories in tax year 1980, plus one-third of the
   amount, if any, by which such revenue received in tax year 1981 exceeds the
   revenue received for tax year 1980. The revenue base for each tax year after
   1981 shall be the revenue base of the preceding tax year plus one-third of the
   increase in the revenues of the subsequent tax year over the revenue base of
   the preceding tax year. If in any tax year the amount of revenues received
   from all categories exceeds the revenue base for such year, the rates shall be
   adjusted as follows: The revenues of those categories with rates at or below
   the maximum shall be subtracted from the revenue base for such year. The
   resulting amount shall be allocated to the category or categories with rates
   above the maximum in a manner determined by the locality, and divided by the
   gross receipts of such category for the tax year. The resulting rate or rates
   shall be applicable to such category or categories for the second tax year
   following the year whose revenue was used to make the calculation.

C. Any person engaged in the short-term rental business as defined in &#xA7;
58.1-3510.4 shall be classified in the category of retail sales for license tax
rate purposes.

D. 1. Any person, firm, or corporation designated as the principal or prime
contractor receiving identifiable federal appropriations for research and
development services as defined in § 31.205-18 (a) of the Federal Acquisition
Regulation in the areas of (i) computer and electronic systems, (ii) computer
software, (iii) applied sciences, (iv) economic and social sciences, and (v)
electronic and physical sciences shall be subject to a license tax rate not to
exceed three cents per $100 of such federal funds received in payment of such
contracts upon documentation provided by such person, firm or corporation to the
local commissioner of revenue or finance officer confirming the applicability of
this subsection.

   2. Any gross receipts properly reported to a Virginia locality, classified for
   license tax purposes by that locality in accordance with subdivision 1 of this
   subsection, and on which a license tax is due and paid, or which gross
   receipts defined by subdivision 1 of this subsection are properly reported to
   but exempted by a Virginia locality from taxation, shall not be subject to
   local license taxation by any other locality in the Commonwealth.

   3. Notwithstanding the provisions of subdivision D 1, in any county operating
   under the county manager plan of government, the following shall govern the
   taxation of the licensees described in subdivision D 1. Persons, firms, or
   corporations designated as the principal or prime contractors receiving
   identifiable federal appropriations for research and development services as
   defined in &#xA7; 31.205-18 (a) of the Federal Acquisition Regulation in the
   areas of (i) computer and electronic systems, (ii) computer software, (iii)
   applied sciences, (iv) economic and social sciences, and (v) electronic and
   physical sciences may be separately classified by any such county and subject
   to tax at a license tax rate not to exceed the limits set forth in subsections
   A through C above as to such federal funds received in payment of such
   contracts upon documentation provided by such persons, firms, or corporations
   to the local commissioner of revenue or finance officer confirming the
   applicability of this subsection.

E. In any case in which the Department of Energy determines that the weekly U.S.
Retail Gasoline price (regular grade) for PADD 1C (Petroleum Administration for
Defense District &#x2014; Lower Atlantic Region) has increased by 20% or greater
in any one-week period over the immediately preceding one-week period and does
not fall below the increased rate for at least 28 consecutive days immediately
following the week of such increase, then, notwithstanding any tax rate on
retailers imposed by the local ordinance, the gross receipts taxes on fuel sales
of a gas retailer made in the following license year shall not exceed 110% of
the gross receipts taxes on fuel sales made by such retailer in the license year
of such increase. For license years beginning on or after January 1, 2006, every
gas retailer shall maintain separate records for fuel sales and nonfuel sales
and shall make such records available upon request by the local tax official.
			The provisions of this subsection shall not apply to any person or entity (i)
not conducting business as a gas retailer in the county, city, or town for the
entire license year immediately preceding the license year of such increase or
(ii) that was subject to a license fee in the county, city, or town pursuant to
&#xA7; 58.1-3703 for the license year immediately preceding the license year of
such increase.
			The Department of Energy shall determine annually if such increase has
occurred and remained in effect for such 28-day period.

HISTORY: Code 1950, § 58-266.1; 1950, p. 155; 1956, c. 242; 1964, c. 424; 1968,
c. 619; 1970, cc. 231, 547; 1974, cc. 196, 438; 1975, cc. 23, 621; 1976, cc.
521, 719; 1977, c. 320; 1978, cc. 772, 799, 817; 1979, cc. 565, 568, 570; 1980,
cc. 318, 736; 1981, cc. 419, 636; 1982, cc. 348, 548, 552, 554, 558, 633; 1983,
c. 554; 1984, cc. 247, 675, 695; 1985, c. 120; 1989, c. 589; 1992, c. 632; 1993,
c. 918; 1996, cc. 77, 715, 720; 2006, c. 763; 2010, cc. 255, 295; 2016, c. 305;
2021, Sp. Sess. I, c. 532.