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Arkansas Tax and Incentives Update

Summary of 2017 Arkansas Economic Development Credits and Incentives Legislation


Matt Boch - Monday, May 01, 2017

Here is a summary of the Arkansas economic development incentives legislation for 2017. Particularly significant is the expansion of local government authority to provide incentives under Acts 533, 685, and 686, after the voters' approval of Amendment 97 in the November 2016 election.

Act 208 repeals the Nonprofit Incentive Act of 2005, which had provided a little-used sales and use tax refund and a payroll rebate designed to persuade nonprofits to locate, invest and hire within the state.

Act 374 made technical corrections to the economic development statutes of title 15, including repeal of obsolete provisions.

Act 393 increases the maximum allowable claim under the Arkansas historic rehabilitation income tax credit program from $125,000 to $400,000 for income-producing properties for projects that start after July 1, 2017. Effective July 1, 2017.

Act 426 repeals the Arkansas Development Finance Corporation Act and the Arkansas Capital Development Company Act and removes references to corporations and companies creatable under those acts.

Act 465 phases out the InvestArk retention investment tax credit by prohibiting approval of applications filed after June 30, 2017. Taxpayers should consider filing applications covering projects that are pending or "on the drawing board" before the filing deadline.

Act 533 amends the Local Government Bond Act of 1985 to authorize local governments to fund economic development projects including land, buildings, equipment, improvements and infrastructure for development or expansion of certain private industries.

Act 685 creates the Local Job Creation, Job Expansion, and Economic Development Act of 2017, which provides that a municipality or county may obtain or appropriate money for a corporation, association, institution, political subdivision of the state, the federal government, or an individual to finance economic development projects or provide economic development services but limited to projects or services that do not exceed five percent (5%) of the city or county's total unobligated general revenue. The Act also repeals the five percent (5%) limitation on the issuance of Amendment 82 bonds.                                              

Act 686 creates local government provisions that implement the economic development expenditure provisions of Amendment 97. Effective March, 27, 2017.

Act 1042 revises the tax credit allowed for an apprenticeship program, which is currently the lesser of $2,000 or 10% of the wages earned by the apprentice. The Act increases the maximum annual credit to $10,000. Effective for tax years beginning on or after January 1, 2018

Act 1046 adds various provisions to the recycling tax credit program that would apply to certain major expansions by qualified manufacturers of steel and new steel specialty products manufacturing facilities for taxpayers that elect to take advantage of these provisions.

(If an effective date is not specifically listed, it should be 90 days after adjournment sine die, on or around July 30, 2017.) 




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