Business Activity Tax (BAT)

This is a tax on the net source gains (gross receipts less deductions) from the sale of Navajo goods  or services, with the legal incidence of the tax on the party receiving the gross receipts.  Navajo goods are all goods produced, processed, or extracted within the Navajo Nation, and Navajo services are all services performed within the Navajo Nation.  The taxable source gains are calculated by taking the gross receipts from the sale of such goods or services and subtracting out certain deductions:

• a standard quarterly deduction of the greater of $125,000 or 10% of gross receipts,

• salaries and wages paid to Navajos,

• the cost of purchasing Navajo goods or services, and

• other payments made to the government of the Navajo Nation

The net source gains are then taxed at a rate of 5%.

    The BAT is a self-reporting tax, with quarterly returns due 45 days after the end of each calendar quarter.