Which types of organizations are typically not subject to sales tax?

Organizations such as state, local, and federal governments are typically not subject to sales tax because they are often considered exempt from such taxation. This exemption is grounded in the principle that governmental entities are using resources to provide services that benefit the public, rather than engaging in commercial transactions that generate profit. The rationale is that taxing a government entity would ultimately affect the public funding available for important services and programs that are provided to citizens.

In contrast, other types of organizations, such as pharmaceutical companies, legal services firms, and transport services companies, generally are engaged in activities that are subject to sales tax depending on the jurisdiction and the nature of their services. For instance, pharmaceutical companies may sell products that are taxable, and legal and transportation services can invoke sales tax depending on certain regulations.