1. (a) Arkansas Tourism Development Act, Arkansas Code § 15-11-501 et seq.

   1. (1)

      1. (A) The Arkansas Tourism Development Act program provides financial incentives to induce the construction or expansion of tourism attractions.
      2. (B) The Arkansas Tourism Development Act is codified in Arkansas Code § 15-11-501 et seq.
      3. (C) The program authorizes state sales tax credits and state income tax credits.

   2. (2)

      1. (A) “Tourism attraction” is defined to include:

2. (i) Cultural or historical sites;

   1. (ii) Recreational or entertainment facilities;

      1. (iii) Areas of natural phenomena or scenic beauty;

         1. (iv) Theme parks;
         2. (v) Amusement or entertainment parks;
         3. (vi) Indoor or outdoor plays or music shows;
         4. (vii) Botanical gardens; and
         5. (viii) Cultural or educational centers.
      2. (B) Certain lodging facilities may also qualify as a tourism attraction project.
      3. (C) A facility regulated under the Arkansas Horse Racing Law, Arkansas Code § 23-110-101 et seq., or the Arkansas Greyhound Racing Law, Arkansas Code § 23-111-101 et seq., shall be a tourism attraction for purposes of the Arkansas Tourism Development Act for any approved project.

   2. (3)

      1. (A)

         1. (i) The tourism development program is administered by the Arkansas Economic Development Commission.
         2. (ii) Upon receiving notification from the Director of the Arkansas Economic Development Commission that an approved company has entered into a tourism project agreement and is entitled to the sales tax credits, the Secretary of the Department of Finance and Administration shall provide the approved company with such forms and instructions as are necessary to claim those credits.

      2. (B)

         1. (i) The amount of sales tax credit will be based on a percentage of approved costs expended by an approved company.
         2. (ii) An approved company shall be entitled to a credit if the company certifies to the secretary that it has expended at least five hundred thousand dollars ($500,000) in a high-unemployment county and one million dollars ($1,000,000) in all other counties in approved costs and the director certifies that the approved company is in compliance with the Arkansas Tourism Development Act.
         3. (iii)
3. (a) (a) The secretary shall issue a sales tax credit memorandum to the approved company equal to fifteen percent (15%) of the approved costs.

4. (b) (b) In high unemployment counties, the secretary shall issue a credit memorandum to the approved company equal to twenty-five percent (25%) of the approved costs.

   1. (c) (c) Qualified amusement parks entering into a financial incentive agreement on or after January 1, 2006, for an approved project that will exceed one million dollars ($1,000,000) are eligible for a sales tax credit equal to twenty-five percent (25%) of the approved costs.

      1. (iv) The sales tax credit memorandum shall not include an offset of the tourism tax levied under Arkansas Code § 26-63-401 et seq.

         1. (v) Only increased sales tax liability as defined in the Arkansas Tourism Development Act may be offset by the issued credit.
         2. (vi) An approved company shall be entitled to use one hundred percent (100%) of the issued credit to offset increased state sales tax liability during the first year if its tax liability is equal to or greater than the amount issued in the state sales tax credit memorandum.
         3. (vii)
5. (a) (a) No sales tax credit memorandum shall be issued for any approved costs expended after two (2) years from the date the tourism project agreement was signed.

6. (b) (b) However, in limited circumstances, the secretary may authorize sales tax credits for approved costs expended up to four (4) years after the agreement was signed.

   1. (C)

      1. (i) The commission has promulgated rules for the implementation and administration of the Arkansas Tourism Development Act, which rules should be obtained from the commission.

         1. (ii) These rules may be obtained from the commission’s website: www.arkansasedc.com.

      2. (D)

         1. (i) Accurate and up-to-date records of all expenditures shall be maintained by the approved business and available for inspection and audit by the secretary.
         2. (ii) The eligibility of questionable items is determined by the secretary.

7. (b) Eligible businesses that signed a financial incentive agreement with the commission prior to March 3, 2003, may be entitled to incentives provided under the following programs:

   1. (1)

      1. (A) Economic Investment Tax Credit (EIC).

      2. (B)

         1. (i) The Economic Investment Tax Credit Act, Arkansas Code § 26-52-701 et seq. [repealed], (formerly the Manufacturer’s Investment Sales and Use Tax Credit Act of 1985) is commonly referred to as the InvestArk Program.
         2. (ii) The purpose of the EIC program is to encourage manufacturers and businesses to continue operations in Arkansas.
         3. (iii) The EIC program allows an eligible business to receive a credit against its monthly direct pay sales and use tax liability for purchases only.
         4. (iv) The credit against the qualified business’s sales and use tax liability shall be seven percent (7%) of the eligible project costs.
         5. (v)
8. (a) (a) In any one (1) year, the amount of EIC credit used cannot exceed fifty percent (50%) of the state sales and use tax liability of a program participant.

9. (b) (b) However, a company with an eligible defense industry project may claim a credit for one hundred percent (100%) of the sales and use tax liability for a reporting period.

   1. (C)

      1. (i) The commission is responsible for determining the eligibility of certain approved projects to receive specified sales and use tax credits and refunds.

         1. (ii) The commission has promulgated rules for the implementation and administration of the Economic Investment Tax Credit Act, which should be obtained from the commission.

      2. (D) In order to qualify for the tax credits provided by the Economic Investment Tax Credit Act, a manufacturer must:

         1. (i) Have been in continuous operation in Arkansas for at least two (2) years prior to applying for tax credits;
         2. (ii) Expend at least five million dollars ($5,000,000) on eligible items; and
         3. (iii) Hold a direct pay sales and use tax permit issued by the Sales and Use Tax Section of the Revenue Division of the Department of Finance and Administration.

      3. (E)

         1. (i) Accurate and up-to-date records of all expenditures for the project approved by the commission shall be maintained by the manufacturer and available for inspection and audit by the secretary.
         2. (ii) The eligibility of questionable items is determined by the secretary;

   2. (2)

      1. (A) Enterprise Zone (EZ).

      2. (B)

         1. (i) The Arkansas Enterprise Zone Act of 1993, Arkansas Code § 15-4-1701 et seq., commonly referred to as the Advantage Arkansas Program, provides state income tax credits and state sales and use tax refunds to eligible businesses.
         2. (ii) The EZ program authorizes a refund of state sales and use tax, and local sales or use taxes if authorized by the pertinent city or county, on the purchases of materials used in the construction of a building or any addition or improvement thereon and machinery and equipment to be located in or in connection with the building.
         3. (iii)
10. (a) (a) The entire State of Arkansas is an enterprise zone.

11. (b) (b) Therefore, there are no restrictions concerning where a participant must be located.

    1. (C)

       1. (i) The commission reviews applications to ensure eligibility.

          1. (ii) If a business is approved for participation in the EZ program, the commission will issue a certificate of eligibility and forward the certificate to the department.
          2. (iii) The department will provide forms and instructions needed for the approved business to receive the sales and use tax refunds.
       2. (D) The commission has promulgated rules for the implementation and administration of the Arkansas Enterprise Zone Act of 1993, which rules should be obtained from the commission.

       3. (E)

          1. (i) Accurate and up-to-date records of all expenditures shall be maintained by the approved business and available for inspection and audit by the secretary.
          2. (ii) The eligibility of questionable items is determined by the secretary; and

    2. (3)

       1. (A) Arkansas Economic Development Act of 1995, Arkansas Code § 15-4-1901 et seq.

       2. (B)

          1. (i) The Arkansas Economic Development Act of 1995 provides benefits similar to the benefits offered in the Enterprise Zone Program.
          2. (ii) The Arkansas Economic Development Act of 1995 program provides state income tax credits and state sales and use tax refunds to eligible businesses.
          3. (iii) The Arkansas Economic Development Act of 1995 program authorizes a refund of state sales and use tax, and local sales or use taxes if authorized by the city or county, on the purchases of materials used in the construction of a building or any addition or improvement thereon and machinery and equipment to be located in or in connection with the building.

       3. (C)

          1. (i) The Arkansas Economic Development Act of 1995 program requires that at least one hundred (100) new employees be hired within twenty-four (24) months of the date an agreement is entered into between the eligible business and the commission.
          2. (ii) The qualifying business must spend at least five million dollars ($5,000,000) on the project covered by the agreement with the commission.
       4. (D) The Arkansas Economic Development Act of 1995 program requires the eligible business to file an endorsement resolution with the commission and the department, and the business and its contractors must give preference and priority to Arkansas manufacturers, suppliers, contractors, and labor in certain circumstances.
       5. (E) The commission has promulgated rules for the implementation and administration of the Arkansas Economic Development Act of 1995, which rules should be obtained from the commission.

       6. (F)

          1. (i) Accurate and up-to-date records of all expenditures shall be maintained by the approved business and available for inspection and audit by the secretary.
          2. (ii) The eligibility of questionable items is determined by the secretary.
          3. (c)

    3. (1)

       1. (A) Effective March 3, 2003, in accordance with Acts 2003, No. 182 (Consolidated Incentive Act of 2003), as amended by Acts 2005, No. 1296, and Acts 2007, No. 1596, eligible businesses that sign a financial incentive agreement with the commission may be entitled to state sales tax refunds or state sales tax credits.
       2. (B) The commission has promulgated rules for the implementation and administration of this act, which rules should be obtained from the commission.

    4. (2) Retention sales and use tax credit (InvestArk) — Acts 2003, No. 182, Arkansas Code § 15-4-2706(c).

       1. (A) This incentive program, commonly referred to as InvestArk, authorizes tax credits for qualified businesses.

       2. (B) In order to qualify, a business must:

          1. (i) Have been in continuous operation in the state for at least two (2) years;
          2. (ii) Invest a minimum of five million dollars ($5,000,000) in a project, including land, buildings, and equipment; and
          3. (iii) Hold a direct pay sales and use tax permit from the department.
       3. (C) If allowed, the amount of the credit shall be one-half percent (1/2%) above the state sales and use tax rate in effect at the time a financial incentive agreement is signed.
       4. (D) In any one (1) year following the year of the expenditures, credits taken cannot exceed fifty percent (50%) of the direct pay sales and use tax liability of the business for taxable purchases.

    5. (3) Sales and use tax refunds for new and expanding businesses (Tax Back).

       1. (A) An incentive program commonly referred to as Tax Back, Acts 2003, No. 183, Arkansas Code § 15-4-2706(d), authorizes a refund of state and local sales and use taxes to eligible businesses that meet the qualifications for investment and payroll thresholds for the tier in which it locates or expands and are approved for benefits by the commission.

       2. (B) To qualify, the eligible business must:

          1. (i) Invest in excess of one hundred thousand dollars ($100,000); and
          2. (ii) Meet the eligibility criteria of the Advantage Arkansas (Arkansas Code § 15-4-2705), Create Rebate (Arkansas Code § 15-4-2707), or ArkPlus (Arkansas Code § 15-4-2706(b)) job creation incentive programs.
       3. (C) This incentive program grants a refund of state and local sales and use taxes paid on the purchases of the material used in the construction of a building or buildings or any addition, modernization, or improvement to a new or expanding eligible business.
       4. (D) The refund is also allowed for the purchases of taxable machinery or equipment associated with the building or project.

       5. (E) For projects approved on or after July 1, 2005, the refund of state sales and use taxes shall not include the refund of taxes dedicated to the:

          1. (i) Educational Adequacy Fund provided in Arkansas Code § 19-5-1227; or
          2. (ii) Conservation Tax Fund provided in Arkansas Code § 19-6-484.

    6. (4) Sales and use tax refund for targeted businesses — Acts 2003, No. 182, Arkansas Code § 15-4-2706(e)(1).

       1. (A) This incentive program extends the benefits of the Tax Back sales and use tax refund program to a category of new and expanding eligible businesses referred to as “targeted businesses”.
       2. (B) This incentive is a discretionary incentive and is offered only at the discretion of the director.

       3. (C) Targeted businesses are found within six (6) growing business sectors that include:

          1. (i) Advanced materials and manufacturing systems;
          2. (ii) Agricultural, food, and environmental sciences;
          3. (iii) Biotechnology, bioengineering, and life sciences;
          4. (iv) Information technology;
          5. (v) Transportation logistics; and
          6. (vi) Bio-based products.

       4. (D) To qualify as a targeted business, the:

          1. (i) Commission must determine that the business falls within one (1) of the six (6) categories noted above; and
          2. (ii) Business must:
12. (a) (a) Have been in operation for five (5) years or less; and

13. (b) (b) Pay, at minimum, one hundred fifty percent (150%) of the lesser of the state or county average hourly wage.

    1. (E) In addition, the targeted business must:

       1. (i) Have an annual payroll of at least one hundred thousand dollars ($100,000); and

          1. (ii) Demonstrate evidence of an equity investment in the targeted business of at least four hundred thousand dollars ($400,000).
       2. (F) A targeted business with an annual payroll in excess of one million dollars ($1,000,000) will not qualify for the targeted business sales and use tax refund, but may be eligible for other incentives offered through the Consolidated Incentive Act of 2003 (Acts 2003, No. 182), as amended by Acts 2005, No. 1296, and Acts 2007, No. 1596.
       3. (G) In addition, the business must invest in excess of one hundred thousand dollars ($100,000) and meet the eligibility criteria of the targeted business payroll income tax credit incentive program (Arkansas Code § 15-4-2709).

    2. (5) Technology-based enterprises investment — Income tax or sales and use tax credit (Targeted ArkPlus) — Acts 2007, No. 1596, Arkansas Code § 15-4-2706(b)(7) – (13).

       1. (A)

          1. (i) At the discretion of the director, a technology-based enterprise, as defined by Arkansas Code § 14-164-203(12), may earn an optional income tax credit or a sales and use tax credit based on new investment.
          2. (ii) The targeted business must:
14. (a) (a) Invest a minimum of two hundred fifty thousand dollars ($250,000) within four (4) years of the effective date of the financial incentive agreement;

15. (b) (b) Create a new payroll of at least two hundred fifty thousand dollars ($250,000); and

    1. (c) (c) Pay wages that are at least one hundred seventy-five percent (175%) of the state or county average hourly wage, whichever is less.

       1. (iii) The amount of credit earned shall be based upon a percentage of the investment and ranges from a minimum of two percent (2%) to a maximum of eight percent (8%) of the investment.

       2. (B)

          1. (i) Prior to the execution of the financial incentive agreement, the targeted business must elect to receive the tax credits as sales and use tax credits or income tax credits.
          2. (ii) The percentage of the targeted business’s tax liability that may be offset is determined by the average hourly wage paid to the new full-time permanent employees and ranges from a minimum of fifty percent (50%) to a maximum of one hundred percent (100%) of its tax liability.

       3. (C)

          1. (i) The approved targeted business must certify eligible project expenditures annually with the department.
          2. (ii) Upon verification of eligibility, the department shall issue the credit according to the tax type specified in the financial incentive agreement.
          3. (iii) The sales and use tax credit may be applied against the company’s state sales and use tax liability as reported on its monthly sales and use tax report in the calendar year following the calendar year of expenditure.
          4. (iv) The reported tax liability that may be offset by the credit may be derived from:
16. (a) (a) Sales made by the approved company and collected from the customer;

17. (b) (b) Use taxes accrued by the company for out-of-state purchases and sales; and

    1. (c) (c) Use taxes accrued and reported on the company’s monthly direct-pay report.

       1. (v) The credit may not be applied against any taxes collected from the company by the seller.

          1. (vi) Any unused credit may be carried forward for a period not to exceed nine (9) calendar years after the calendar year in which it was first earned.
          2. (d) Nonprofit Incentive Act of 2005, Arkansas Code § 15-4-3101 et seq. [repealed].

    2. (1)

       1. (A) The Nonprofit Incentive Act of 2005 [repealed], creates new financial incentives to encourage certain nonprofit organizations to locate in the State of Arkansas.
       2. (B) The incentives consist of a payroll rebate and a sales and use tax refund.
       3. (C) “Nonprofit organization” is defined as an entity that has been approved by the Secretary of State as having met the qualifications for a nonprofit organization in Arkansas, and which has also received a 501(c)(3) designation from the Internal Revenue Service.

    3. (2) Eligibility. In order to be eligible for this program, a nonprofit organization must satisfy the following criteria:

       1. (A) The organization must have a payroll of new full-time permanent employees in excess of one million dollars ($1,000,000);
       2. (B) The organization must pay wages that average in excess of one hundred ten percent (110%) of the lesser of the county or state average hourly wage;
       3. (C) The organization must receive a minimum of seventy-five percent (75%) of its income from out-of-state sources;
       4. (D) Hospitals, medical clinics, educational institutions, and churches are specifically excluded;

       5. (E)

          1. (i) The organization must qualify for payroll rebate benefits in order to receive a sales and use tax refund.
          2. (ii) The eligibility requirements for the payroll rebate are found in Arkansas Code § 15-4-3106 [repealed].
          3. (iii) The payroll rebate is based on the incentive agreement between the nonprofit organization and the commission.
          4. (iv) The granting of the payroll rebate is at the discretion of the director.
          5. (v) The commission has promulgated rules for the implementation and administration of the Nonprofit Incentive Act of 2005 [repealed], which rules should be obtained from the commission;
       6. (F) A sales and use tax refund shall be made only if, after audit of expenditures and payroll by the Revenue Division of the Department of Finance and Administration, the division determines that the nonprofit organization is in compliance with all qualifications to receive the benefits of this program; and
       7. (G) The organization must sign a financial incentive agreement with the commission prior to the start of any construction.

    4. (3) Sales and use tax refund.

       1. (A) An application for a sales and use tax refund under the nonprofit organization incentive program shall be filed with the commission and shall include an endorsement resolution from the governing authority of a municipality or county where the nonprofit organization is or will be located.

       2. (B) The resolution must:

          1. (i) Endorse the applicant’s application in the sales and use tax refund program; and
          2. (ii) Authorize the refund of any sales and use tax levied by the municipality or county.
       3. (C) The secretary shall authorize a sales and use tax refund of state and local sales and use taxes on the purchases by the nonprofit organization of the material used in the construction or renovations of a building housing any new or expanding nonprofit organization and machinery and equipment to be located in or in connection with the building.
       4. (D) To qualify for this refund, a qualified nonprofit organization must spend in excess of five hundred thousand dollars ($500,000) on buildings, machinery, and equipment in the new or improved facility.
       5. (E) All claims for refunds must be filed with the division within three (3) years from the date of the qualified purchase or purchases.

18. (e) The Motion Picture Incentive Act of 1997 [repealed], Arkansas Code § 15-4-2001 et seq.

    1. (1) The Motion Picture Incentive Act of 1997 [repealed], expired June 30, 2007.
    2. (2) Pursuant to the sunset clause contained in Arkansas Code § 15-4-2011, the opportunity for a tax incentive provided in Arkansas Code § 15-4-2005 expired on June 30, 2007.

Codification Notes: Arkansas Code § 26-52-701 et seq., was repealed by Acts 2017, No. 465, § 5. Arkansas Code § 15-4-3101 et seq., was repealed by Acts 2017, No. 208 § 1. The Motion Picture Incentive Act of 1997, Acts 1997, No. 919, was repealed and replaced by the Digital Product and Motion Picture Industry Development Act of 2009, Acts 2009, No. 816. This section as promulgated prior to codification into the Code of Arkansas Rules contained a footnote as follows: "Source: Ark. Code Ann. §§ 15-4-1701 et seq.; 15-4-1901 et seq.; 15-4-2001 et seq.; 15-4-2701 et seq.; 15-4-3101 et seq.; 15-11- 501 et seq.; 26-52-701 et seq."