BusIness GuIde

State Offers Array of Business-Friendly,Competitive Tax IncentivesINCENTIVESECONOMIC DEVELOPMENTThe state offers incentives to eligible businesses that contract with Arkansas colleges in performing research.The state of Arkansas operates the way businessesdo, proactively anticipating opportunities andquickly responding to challenges in innovativeways. This approach, combined with our incentiveprograms, makes Arkansas a profitable choicefor locating or expanding a business.Arkansas's performance-based incentives are nationallycompetitive and easy to use. The ArkansasEconomic Development Commission will focuson your business' specific needs, conduct a costbenefitanalysis and design a tailored incentivepackage.Arkansas's incentives, which were updated in2003, are based on payroll instead of number ofjobs and are determined according to location.Counties are divided into four tiers, based onpoverty rate, unemployment, per capita incomeand population growth. Tiers are assigned annuallyon July 1, based on the previous year'sstatistics.In addition to an array of competitive incentives,when a business locates in Arkansas, it can takeadvantage of the following additional benefits:• Favorable unemployment insurance andworkers' compensation rates.• A right-to-work state, as guaranteed by theArkansas Constitution.• Favorable individual and corporate incometax rates.Benefit Based onPayroll of New, Full-time,Permanent EmployeesPayrollTier Threshold1 $125,000 1% of payroll2 $100,000 2% of payroll3 $75,000 3% of payroll4 $50,000 4% of payrollAdvantage Arkansas —Income Tax CreditAdvantage Arkansas offers a state income taxcredit for job creation based on the payroll ofnew, full-time, permanent employees hired asa result of the project.The payroll threshold for qualifying for AdvantageArkansas and the benefit received dependson the tier in which the business locates or expands.Arkansas is segmented into four tiersbased on poverty rate, population growth, percapita income and unemployment rate. The incometax credit is earned each tax year for a periodof five years. The income tax credit cannotoffset more than 50 percent of a business' incometax liability in any one year and may be carriedforward for nine years beyond the tax year inwhich the credit was first earned. The credit beginsin the tax year in which the new employeesare hired. Employees must be Arkansas taxpayers.Tax Back — Sales and UseTax RefundAdvantage Arkansas participants investing atleast $100,000 are eligible for the Tax Back program.This program provides a refund of salesand use taxes for building materials and taxablemachinery and equipment associated with theapproved project.The business must sign a job-creation agreementunder the Advantage Arkansas programwithin 24 months of signing theTax Back agreement.Applicants for Tax Back must obtainan endorsement resolution from thelocal governing authority that authorizesthe refund of its local taxes.Applicants must meet the samequalification criteria as AdvantageLittle Rock Regional Chamber of Commerce 2009 Business Guide 81