Construction contracting classification
In short
The city-level name for contracting tax. Arizona cities tax construction contracting under the Model City Tax Code; the state taxes the same work under prime contracting.
In full
Cities do not use the state's name for it. Where A.R.S. § 42-5075 calls the classification prime contracting, the Model City Tax Code calls it construction contracting, at § 415, and taxes every construction contractor engaging or continuing in that business activity within the city.
The two track each other closely. The city section carries the same MRRA exclusion and the same de minimis rule — the 15% test — and it imports the state's vocabulary outright: any term the city paragraph does not define that A.R.S. § 42-5075 does define carries the meaning the statute gives it. The city section also carries the same exclusion for work performed by a person not required to be licensed by the Registrar of Contractors.
Two differences are worth holding onto. The state states its base as sixty-five percent of gross income; the city reaches the same result by allowing a thirty-five percent deduction from gross. And sales of manufactured buildings are excluded from construction contracting and taxed under a separate city section, while at the state level a manufactured building dealer is inside the prime contracting classification.
Subcontracting income is exempt from the city tax, but the exemption is conditioned. The city definition of subcontractor requires a written declaration from the contractor, owner-builder, or seller of new manufactured buildings above, stating that party is liable for the tax and supplying its municipal privilege tax license number.
Sections 415 through 418 are the construction contracting article: construction contractors at § 415, Speculative Builder at § 416, Owner-Builder at § 417.
Model City Tax Code § 415; A.R.S. § 42-5075