Arkansas proactively anticipates opportunities and quickly responds to challenges in innovative ways. This approach, with a tailored incentive package, makes Forrest City and Arkansas a profitable choice for locating or expanding a business.

Advantage Arkansas provides income tax credits and sales and use tax refunds to qualifying businesses that create new jobs as a result of location, expansion or facility modernization projects anywhere in he state. The act provides an income tax credit to eligible businesses equal to 100 times the average hourly wage paid, with a cap of $3000 per new employee; in high-unemployment counties, the multiplier increases to 100, with a cap of $6,000. Advantage Arkansas also allows a refund of the sales and use tax paid on purchase of materials used in construction of eligible project buildings and on eligible machinery and equipment.

This act offers four different income tax credits to Arkansas taxpayers furthering biotechnical business development:

• A 5 percent credit applied to costs to build and equip eligible biotechnical facilities;
• A 30 percent credit both for eligible employee training costs and for contracts with state-supported institutions of higher education to conduct qualified cooperative research projects;
• A credit for qualified research in biotehnology, including but not limited to the cost of purchasing, licensing, developing or protecting intellectual property. This credit is equal to 20 percent of the amount the cost of qualified research exceeds the cost of such resource in the base year;
• A 30 percent credit for the cost of buildings, equipment and intellectual property necessary to produce advanced biofuels, which include ethanol, methanol or their derivatives, produced from biomass.

AEDA, a discretionary incentive that requires the creation of higher-paying jobs, authorizes an income tax credit to be offered by the Department to eligible businesses that invest at least $5 million in a plant construction or expansion project and employ at least 100 new full-time permanent employees within 24 months. The amount of credit, which is determined by comparing the wages paid to the new employees to the country or state annual average wage, may be up to 100 percent; in high unemployment counties, the wage ratio must exceeded 125 percent to receive full credit. Businesses must receive an endorsement resolution from the local governing body endorsing the program and pay a one-time administration fee of $2,500.

Qualifying motion picture production companies spending more than $500,000 within six months or $1 million within 12 months in conjunction with the filming or production of one feature film, telefilm, music video, documentary, episodic television show or commercial advertisement may receive a refund of state sales and use taxes paid on qualified expenditures incurred in conjunction with the project.

Corporate income tax credits and state sales tax credits are available for businesses that initiate approved tourism attraction projects. The income tax credits are based on the criteria of Advantage Arkansas. The sales tax credits, which range from 10 to 25 percent, are for eligible projects that cost at least $500,000. An application must be filed with and approved by the Department.

Arkansas offers a tax incentive for companies that provide on-site child care for employees. A business may contract the operations or run the facility itself after being approved to operate an early child care program. There are two state income tax credit options: a credit of 3.9 percent of the total annual payroll of the employees working in the child care facility or a one-time $5,000 income tax credit for the first year. In addition, a business may receive a refund on sales and use taxes on construction materials and furnishings purchased to equip an approved child care facility.

The Department is authorized in highly competitive situations to offer the Create Rebate Program to companies that hire specified net new full-time permanent employees within 24 months after completion of an approved expansion and or new location project. Depending on the location and negotiation of the Department, the companies may receive a financial rebate from 3.9 to 5 percent of the annual payroll of the new employees.

Arkansas' Customized Training Incentives Program is one of the top programs of its kind in the United States. Services are provided through two approaches:

• The Business and Industry Training Program provides intensive pre-employment training for eligible new and expanding businesses and industries that commit to creating new jobs in Arkansas. Customized Training Incentive project managers work with companies to design the training plans, arrange training facilities, develop training manuals and recruit and select trainees and instructors. After completing the training program, trainees are ready for selection for employment in the company's new or expanded facility.
• The Existing Work force Training Program (EWPT) provides financial assistance and planning for customized, industry-specific training for eligible businesses and industries to upgrade the skills of the existing work force. The training helps a company and its employees adapt to new or altered technologies of management and supervisory systems., continuous improvement or production methods. Eligible businesses may receive direct funding or income tax credits. EWTP encourages companies to use state supported educational institutions and to participate in training consortia, formal organizations of business and industry that identify common training needs in the community.

Arkansas exempts from property tax finished goods and raw materials that are in transit or awaiting shipment to out-of-state customers.

The InvestArk Tax Credit is available to eligible business and industry established in Arkansas for more than two years that invest at least $5 million in a facility or equipment for defined purposes. A credit against the business's state sales and use tax liability, equal to 7 percent of the total project cost, not to exceed 50 percent of the total sales and use tax liability in a single year, is allowed. A provision for companies with multiple locations in Arkansas allows combining eligible projects to meet the minimum investment. An application must be filed with the Department 30 days prior to the start of construction or taking delivery of the eligible machinery.

Arkansas offers a 30 percent income tax credit for the purchase and installation of eligible equipment used exclusively for reduction, reuse or recycling of solid waste material for commercial purposes, whether or not for profit. The equipment must be used to collect, separate, process, modify, convert, treat or manufacture products containing at least 50 percent recovered materials, of which at least 10 percent is post-consumer waste.

To receive the credit, taxpayers must be certified that they meet the requirements of the Department of Environmental Quality.

Arkansas is constitutionally a right to work state, one of only 21 in the country. Right-to-work states prohibit making union membership a condition of employment.

Arkansas provides 30 percent tax credit to eligible companies for reimbursements they make to a full-time, permanent employee for approved educational expenses. The employee must attend an accredited Arkansas post secondary educational institution. The total credits allowed in the state cannot exceed 25 percent of a business's income tax liability in any year.

Arkansas has one of the most progressive workers' compensation programs in the nation, with more that 30 insurance underwriters. Since July 1, 1992, the state has not experienced a rate increase, and premiums have decreased overall by 38 percent.

If tax-exempt industrial revenue bonds are used to finance a project, the authorizing governmental agency (either the city or the county) has the option to negotiate Payment In Lieu Of Taxes (PILOT) for property taxes. Any property tax abatement exceeding 64% of normal tax rates must be approved by the Arkansas Department of Finance & Administration and the Arkansas Education Department.

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©2001 Forrest City Area Chamber Of Commerce. All Rights Reserved.
203 N. Izard; Forrest City, AR 72335
870-633-1651 fax: 870-633-9500

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