BusIness GuIde

Favorable State, Local Tax StructuresProvide Ample Revenue, IncentivesTAXESLIFESTYLEA major indicator of astate’s business climateis its tax structure.Arkansas maintains afair and pro-businesstax system.Arkansas State TaxesCorporate Income.........1.0 - 6.5%Personal Income............1.0 - 7.0%Sales and Use.........................6.0%Corporate Franchise............0.27%Unemployment InsuranceFor new businesses.................. 3.3%For existing Arkansas business...2.0%Corporate Franchise TaxThe Arkansas franchise tax is anannual tax imposed on Arkansascorporations for the grant of charterprivileges and on non-Arkansascorporations for the privilege ofdoing business. The due date forthe tax is June 1 in the calendar yearfollowing the year of incorporationor qualification and each June 1thereafter.For a corporation incorporated underthe laws of the state of Arkansas,the franchise tax is calculated bymultiplying the number of outstandingcapital shares by the par value (ifno par stock, $25 is used) of thoseshares, then multiplying by 0.0027.For a corporation incorporatedoutside Arkansas but authorized todo business in the state, the numberof issued and outstanding capitalshares is multiplied by the par valueto obtain the total value. This valueis multiplied by the percentage ofNumber of issued andoutstanding capital shares xTotal value of issued andoutstanding capital stock xassets applicable to Arkansas (Arkansasassets divided by total assets)to obtain the Arkansas capital stock.The resulting figure is multiplied by0.0027 to obtain the franchise tax.Businesses locating in Arkansas donot have to disclose the total assetsof their parent corporations. If abusiness is a U.S.-based corporationand is simply applying for authorizationto do business in Arkansas, itneed only supply a balance sheet ofthat U.S. corporation.Corporations without authorizedcapital stock shall pay an annual taxof $100 regardless of valuation. Nocorporation shall pay a tax of lessthan $50 or more than $1,075,000.Par value;$25 if no par value =Percentage of assets applicableto Arkansas =Corporate Income TaxDomestic corporations and allforeign corporations doing businessin Arkansas are subject to tax on netincome at the following rates:First $3,000................................1%Next $3,000...............................2%Next $5,000...............................3%Next $14,000.............................5%Next $75,000.............................6%Over $100,000........................6.5%The portion of income that exceedseach category is taxed at the nexthigher rate. For example, if abusiness has corporate net incomeof $125,000, the first $3,000 istaxed at 1 percent, the next $3,000is taxed at 2 percent, and so on.Total value of issuedand outstanding capital stockArkansas capital stockArkansas capital stock x 0.0027 = Franchise tax dueLittle Rock Regional Chamber of Commerce 2009 Business Guide 41