InvestArk (Sales and Use Tax Credit)
InvestArk is a sales and use tax credit program available to businesses established in Arkansas for two years or longer that invest five million dollars ($5,000,000) or more at a single location in plant or equipment for new construction, expansion or modernization.
The business must be approved for the program prior to beginning construction or incurring eligible project costs and the company must obtain a direct-pay sales and use tax permit from the State of Arkansas. A credit against the business’ state direct-pay sales and use tax liability, equal to one-half percent (1/2%) above the state sales and use tax rate in effect at the time of application, is earned based on the total eligible project cost. Currently, the percentage that may be earned as credit is 7% of eligible project expenditures. In any year, tax credits claimed under this program cannot exceed 50% of the business’ sales and use tax liability on taxable purchases. All reported expenditures will be audited by the Arkansas Department of Finance and Administration.
The credit is earned in the year the eligible expenditure is made and can be applied against the business’ state direct-pay sales and use tax liability in the year following the year of expenditure. Any unused credits may be carried forward for a period of up to five (5) years. Total project expenditures must be incurred within four (4) years of the date the project is approved by AEDC.
Tax Back (Sales and Use Tax Refund)
The Tax Back program provides sales and use tax refunds on the purchase of building materials and taxable machinery and equipment to qualified businesses investing at least $100,000 and who either a) sign a job creation agreement under the Advantage Arkansas or Create Rebate programs within 24 months of signing the Tax Back agreement or b) have met the requirements of an Advantage Arkansas or Create Rebate agreement within the previous 48 months.
Applicants for Tax Back must also obtain an endorsement resolution from the local governing authority authorizing the refund of its local taxes. Applicants must meet the qualification criteria under the requisite Advantage Arkansas or Create Rebate program in which they are participating and must be approved by AEDC.
The refund of sales and use taxes shall not include the refund of taxes dedicated to the Educational Adequacy Fund provided in §19-5-1227 or the taxes dedicated to the Conservation Tax Fund provided in §19-6-484; which totals 1%. The state tax rate is 6.5% so the eligible refund would be 5.5%.
Manufacturers in NAICS codes 31-33
- Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer-related businesses must derive at least 75% of their revenue from out-of-state sales
- Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out-of-state sales
- Distribution centers that derive 75% of their sales revenue from out-of-state customers
- Intermodal facilities with more than one (1) mode of interconnected movement of freight, commerce, or passengers
- Office sector businesses that support primary business needs and that are non-retail businesses deriving at least seventy-five percent (75%) of their sales revenue from out-of-state
- National or regional corporate headquarters as classified in the NAICS code 551114
- Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710
- Scientific and technical services businesses that derive at least 75% of their revenue from out-of-state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less.