Arkansas Direct Financial Incentives 2011
Arkansas' economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include industrial revenue bonds, industrial revenue bond guarantees, and a Community Development Block Grant Program.
Area Development Research Desk (March 2011)
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The benefits under this program are determined in relation to the tier in which the business locates. The state is segmented into four tiers based on poverty rate, population growth, per capita income and unemployment rate. Benefits range from four percent of payroll per year for five years in a Tier 4 county, to one percent of payroll per year for five years in a Tier 1 county.
The Tax Back program provides sales and use tax refunds on the purchase of building materials and machinery and equipment in conjunction with an approved project. Tax Back requires a minimum investment of $100,000 for a new construction, expansion or modernization project approved by AEDC. This program also requires a job creation agreement under the Advantage Arkansas program.
The InvestArk program is available to businesses established in Arkansas for two years or longer investing $5 million or more in a new construction, expansion or modernization project. The incentive offered by this program is a sales and use tax credit based upon a percentage of eligible project expenditures equal to one-half percent above the state sales and use tax rate in effect at the time the project is approved by AEDC. The credit may be used to offset 50 percent of the businesses' state sales and use tax liability. The credit can be applied against the businesses' state sales and use tax liability in the year following the year of the expenditure. If the entire credit cannot be used in the year earned, the remainder may be carried forward for five years, or until the credit is entirely used. Total project expenditures must be incurred within four years of the project plan certification.
The Create Rebate Program provides financial incentives to companies in highly competitive situations, which enable Arkansas to compete with another state's incentives. This incentive may only be offered at the discretion of the director.
This incentive requires a minimum payroll of $2 million for the new permanent employees and provides a financial incentive payment based upon a percentage of payroll for the new permanent employees. The annual payroll threshold of the new employees must be met within 24 months following the date a financial incentive agreement is signed with AEDC. The benefits under this program are determined in relation to the tier in which the business locates. The state is segmented into four tiers based on poverty rate, population growth, per capita income and unemployment rate.
This program offers an income tax credit equal to 10 percent of the investment in land, buildings and equipment associated with an approved project.
The benefits under this program are the same regardless of the tier in which the business locates; however, the company must meet the investment and income thresholds established for the tier in which it locates or expands. This incentive may only be offered at the discretion of the director.
Targeted business incentives:
These discretionary incentives are for start-up companies in emerging sectors that are less than five years old, have an annual payroll between $100,000 and $1 million, and pay at least 150 percent of the lesser of the state or county average hourly wage in which the business locates, and have a minimum equity investment of $400,000.
Emerging technology sectors include:
• Advanced materials and manufacturing systems
• Agriculture, food, and environmental sciences
• Biotechnology, bioengineering, and life sciences
• Information technology
• Transportation logistics
• Bio-based products
Companies meeting these criteria are eligible for a transferable income tax credit equal to 10 percent of payroll for up to five years, a transferable income tax credit equal to 33 percent of eligible research and development costs, and sales and use tax refunds on building materials and necessary equipment.