Russellville is designated an Enterprise Zone whereby companies can take full advantage of several financing packages, ranging from local bank loans to industrial revenue bonds.

Advantage Arkansas Program

(Formerly known as the Enterprise Zone Program)

The entire state of Arkansas is designated as an Enterprise Zone under the Advantage Arkansas Program.  The program provides income tax credits and sales and use tax refunds to qualify businesses that create new jobs as a result of location, expansion, or facility modernization projects anywhere in Arkansas.

To qualify for Advantage Arkansas, a business must obtain an endorsement resolution from the local governing authority and be approved by the Arkansas Department of Economic Development.  The business's operations must fit one of the following descriptions continuously and throughout the project term:

·Manufacturers in SIC codes 20-39 and businesses primarily engaged in commercial physical or biological research as classified by SIC code 8731 that create one or more net new full-time permanent jobs; or

· Eligible computer firms with no retail public sales that derive at least 75 percent of their revenue from out-of-state sales and create five or more net new full-time permanent jobs; or

· Businesses that primarily engage in motion picture production with no retail public sales that derive at least 60 percent of their revenue from out of state sales and create 25 or more net new full time permanent jobs; or

· Distribution centers, including e-commerce distributors, that derive at least 75 percent of their resources form out of state sales; office sector businesses; corporate or regional headquarters; or trucking/distribution terminals with no retail public sales that create 25 or more new full time permanent jobs ; or

·Operations that extract coal or lignite from within the boundaries of the State of Arkansas and hire at least 25 employees.

Income Tax Credit

Advantage Arkansas provides a credit on state income tax credit equal tot he average hourly wage of each new worker times 100, with a $3,000 cap per employee.

The multiplier increases from 100 to 400 with a new a $6,000 cap per employee, when a business locates in a "high-unemployment" county.  The multiplier also increases form 100 to 400 when a  county has experienced a sudden loss of jobs due to a closing of one or more businesses and is approved by the Arkansas Economic Development Commission as a "high unemployment" county.

Employees must be Arkansas taxpayers to qualify for the credits.  The income tax credit begins in the year in which the new employees are hired.  Any unused portion of the credit may be applied against income tax for the succeeding nine years.

Example:

New employees x  Average Hourly wage  x  multiplier  =  Tax Credits
100                x        $10.00          x           100            =   $100,000

In counties with high unemployment
100            x              $10.00          x           400            =  $400,000

Sales and Use Tax Refunds

Advantage Arkansas participants are also eligible for a refund of sales and use taxes for building materials and taxable equipment connected with the eligible project.

Contact: Arkansas Department of Economic Development at 501-682-7387 for more information.

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InvestArk Tax Credit

(Cannot be used in conjunction with Advantage Arkansas)

The InvestArk Tax Credit is available to industries established in Arkansas for two years or longer investing $5 million or more in plant or equipment ($6 million for projects involving multiple Arkansas locations) for new construction, expansion, or modernization.  The business must be approved for the program 30 days prior to beginning construction. A credit against the business' state and sales 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 on approved project expenditures.  All projects can be audited upon completion to confirm tax credits.

The credit can be applied against the business's state and sales use tax liability in the year following the expenditure.  If the entire credit can not be used in the year earned, the remainder may be carried forward for six years, or until the credit is entirely issued.  Total project costs must be incurred within five years of the project plan certification.

Note: Companies are restricted from using the Advantage Arkansas Program and the InvestArk Program for the same project.  The company should evaluate the two programs and choose the one that would provide the greatest benefit for the specific project.  

Businesses eligible for the incentive include:

Manufacturers in SIC codes 20-39 and businesses primarily engaged in commercial physical or biological research as classified by SIC code 8731; or

Eligible computer firms and businesses primarily engaged in motion picture production with no public retail sales that service at least 75 percent of their revenue from out-of-state sales; or

Distribution centers, office sector businesses, or corporate or regional headquarters with no retail public sales.

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Free Port Law

Arkansas has a free port law that exempts from property tax those finished goods and raw materials in transit or awaiting shipment to out-of-state customers.

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Create Rebate Program

Negotiated by ADED

Businesses hiring specified net new full-time permanent employees within 24 months after completion of an approved expansion and/or new location project may be eligible for the Create Rebate Program. 

Under terms negotiated by the Arkansas Department of Economic Development, this program provides businesses a financial incentive, to be used for a specific purpose, from 3.9 to 5 percent of the annual payroll of the net new full-time employees.   The financial incentive increases to  five percent in "high unemployment" counties.

Incentives are 12 months after the business has hired the minimum number of certified net new full-time permanent employees. 

To be eligible for benefits the Create Rebate Program incentive a company must be either:

An industry with SIC codes of 20-39 and will create 100 or more new full time permanent jobs; or

Eligible computer businesses with no retail public sales that derive at least 75 percent of their revenues from out of state sales that create 25 or more new full time permanent jobs; or

Businesses primarily engaged in motion picture production with no retail public sales that derive at least 60 percent of their revenue from out of state sales that create at least 50 or more net new full time permanent jobs.; or

Businesses primarily engaged in commercial physical and biological research as defined by SIC code 8731 that create 50 or more net new full time permanent jobs; or

Distribution centers, including e-commerce distributors, that derive at least 75 percent of their resources from out of state sales, have no retail public sales, and create at least 100 net new full-time permanent jobs; or

Office sector businesses or national, corporate headquarters with no retail public sales that create at least 50 or more net new full-time permanent jobs; or

Operations that extract or lignite form within the boundaries of the State of Arkansas and hire at least 25 employees. 

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Recycling Equipment Tax Credit

Act 654 of 1993 allows Arkansas taxpayers to receive a income tax credit for the purchase of equipment used exclusively for waste reduction, reuse, or recycling of solid waste material for commercial purposes, whether or not for profit, and the cost of installation of such equipment by outside contractors. Such equipment must be used in the collection, separation, processing, modification, conversion, treatment, or manufacturing of products containing at least 50 percent recovered materials of which at least ten percent is post-consumer waste.

The amount of the tax credit shall equal 30 percent of the cost of eligible* equipment and installation costs. Credits may be carried over a maximum of three consecutive years following the taxable year in which the credits accrued. Taxpayers receiving credit under this act for the purchase of machinery and equipment shall not be entitled to any other state or local tax credit or deduction based on the purchase of the machinery or equipment, except normal depreciation.

*Eligibility is determined by the Arkansas Department of Environmental Quality.

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Arkansas Economic Development Act (AEDA)

(Negotiated by ADED)

To utilize the AEDA program, companies must sign a financial agreement prior to construction outlining the terms of the incentives and including the following stipulations:

• Businesses must invest at least $5 million in a plant construction or expansion project; 
• Companies must employ at least 100 net new full-time permanent employees within 24 months of the date that the financial agreement is signed and maintain at least 100 new full-time permanent employees at the new project location for the duration of the incentive period. Failure to do so could result in termination of the program and reimbursement of the incentives credited plus penalty and interest; and
• The AEDA program requires a one-time administration fee of $2,500.

Eligible businesses include the following:

·An industry with SIC codes 20 through 39

·Eligible computer businesses with no retail public sales that derive at lest 75 percent of their revenues form out of state sales.

·Businesses primarily engaged in commercial physical or biological research as defined by SIC code 8731; or

·Businesses primarily engaged in motion picture production with no retail public sales that derive at least 60 percent of their revenue from out of state sales; or

·Distribution centers, including e-commerce distributors, with no retail public sales, or

·Office sector businesses or national, corporate headquarters with no retail public sales, or

·Operations that extract coal or lignite from within the boundaries of the State of Arkansas.

There are two basic incentives provided by the AEDA program. The first, a state corporate income tax credit, provides tax credits up to 100 percent of the total amount of investment in the project. The amount of income tax credit taken during any tax year shall not exceed the annual Arkansas income tax liability resulting from the project plant or facility.

The second incentive provides a sales and use tax refund on buildings and equipment.

Income tax credits shall be as follows

Qualifying Wage Ratio*              Tax Credit
Less than 125%                        None
125%-149%                             50%
150%-174%                             75%
175% or above                         100%

*The lesser of the county and state annual average.

Projects meeting all eligibility criteria that locate in high unemployment counties can be eligible for a credit up to 100 percent at the discretion of the Director of the Department of Economic Development so long as the average hourly wage exceeds 125 percent of the county or state annual average wage.

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Child Care Facility Tax Incentive

Arkansas offers a tax incentive for businesses that provide child care for their employees.

A business may choose between two state income tax credit options: 1) a credit of 3.9 percent of the total annual payroll of the employees working in the child care facility, or 2) a one-time $5,000 income tax credit for the first year.  The income tax credit may be carried forward for two years or until used entirely, whichever comes first.

In addition to either option, businesses may receive a refund on sales and use taxes on construction materials and furnishings purchased to equip an approved child care facility.

To qualify for these incentives, the business must be approved to operate an early childcare program.  The business may choose to operate the facility or contract the operations.

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Public Roads Improvement Grant

The Arkansas Public Roads Improvements Credit Act of 1999 provides an income tax credit to any individual, fiduciary, or corporation subject to Arkansas state income tax that contributes to the Public Roads Incentive Fund of the Department of Economic Development.  The contribution may be made to a general improvement fund or designated for a specific project that is approved by the director.

The credit cannot exceed 33 percent of the taxpayers' contribution.  In any one tax year, the credit cannot exceed 50 percent of the taxpayer's net Arkansas state income tax liability after all other credits and reductions have been calculated.  Any amount over 50 percent can be carried forward up to three years.

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Emerging Technology Development

The Arkansas Emerging Technology Development Act of 1999 provides an economic incentive to manufacturers of high-growth energy technologies that are on the verge of full entry into world market.  The act provides a state income tax credit, with a carry forward of 14 years, of 50 percent of the cost of purchasing or constructing a facility that designs, develops, or produces photovolaics (solar cells), electric vehicle components, fuel cells, micro-turbines, stirling engines, and nanotechnology.  Eligible costs include land, infrastructure, renovation, building improvements and machinery.

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The Arkansas Biotechnology Development and Training Act of 1997

The Arkansas Biotechnology Development and Training Act of 1997 offers income tax credits to Arkansas taxpayers engaged in eligible biotechnical business development.  The first credit is a 5 percent income tax credit applied to the costs to build and equip eligible biotechnology facilities.  Allowable expenditures include cost associated with the purchase, construction, expansion, improvements, and/or renovation of biotechnology facilities, and cost to purchase and install equipment.

The second credit allows 30 percent income tax credit both for eligible training costs and for contracts with state-supported institutions of higher education to conduct qualified cooperative research projects.  Credit for training shall not include salaries and wages of the employees being trained and cannot exceed $10,000 per employee.

The third credit allows an income tax credit for qualified research in biotechnology, 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 research in the base year.

An income tax credit is allowed equal to 30 percent of the cost of buildings, equipment, and higher education partnerships and licenses for intellectual property necessary to produce advanced biofuels.

Income tax credits shall be used to offset the first $50,000 of income tax liability, arising during the credit year and 50 percent of any remaining income tax liability for the year.  Unused credit may be carried forward for 14 taxable years after the credit year in which the credit originated.

Taxpayers receiving credit under this Act shall not be entitled to any other state or local tax credit or deduction for the claimed items, except normal depreciation.  

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Training Programs

Customized Training Incentives

The Business and Industry Training Program provides pre-employment training for Arkansas workers to meet the skills needed in the state's new and expanding industry.

The Customized Training Incentive team works with the Community and Business Development Team during the negotiations process.  After a commitment to the state is made, a specified Customized Training Incentive Coordinator is assigned to develop the training plan with the business.

The Existing Workforce Training Program provides financial assistance to Arkansas' businesses and eligible consortia of businesses for upgrading the skills of the existing workforce.  Skills upgrade training is defined as instruction conducted in a classroom environment at a work site, an educational institution or a neutral location, that provides an existing, full-time employee with the new skills necessary to enhance productivity, improve performance and/or retain employment.

Eligible businesses include:

·Manufacturers in SIC codes 20-39; or

·Eligible computer firms with no public retail sales that derive at least 60 percent of their revenue from out-of-state sales; or

·Businesses primarily engaged in commercial physical and biological research as defined by SIC code 8731

Financial assistance is available in  two forms.  For businesses or consortia that use state supported educational institutions for eligible training, grant amounts shall be the lesser of 50 percent of the amount paid for such training or the instructional hourly rate established by the instructional hours delivered.  Tax credits are available to eligible businesses that cannot exceed $15 per instructional hour.  Businesses may not receive grants and tax credits for the same training.

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Arkansas Motion Picture Incentive Act

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

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Tuition Reimbursement Tax Credit

Arkansas provides a 30 percent income tax credit to eligible companies for reimbursements they make to employees for approved educational expenses.  The employees must attend an accredited Arkansas post-secondary educational institution. 

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Tourism Development

The Arkansas Tourism Development Act provides state sales tax credits and corporate income tax credits to businesses initiating approved tourism attraction projects.

Sales Tax credits shall be determined in accordance with the following criteria:

·Eligible minimum project costs must be $500,000

· The percentage of sales tax credits, ranging between 10 and 25 percent, shall be determined by total approved project costs.

· Sales tax liability is determined by the incremental sales tax liability incurred as a result of the project.

·Other review criteria requested by the Arkansas Department of Economic Development may be requested to determine whether the tourism attraction project meets the intent of the Act.

Additionally, eligible businesses may receive a credit n corporate income tax equal to the average hourly wage of each new worker times 100, with a $3,000 cap per employee.  The multiplier increases from 100 to 400 with a $6,000 cap per employee in a "high-unemployment" county.  Employees must be Arkansas taxpayers. 

Both credits begin in the year in which the new employees are hired.  Any unused portion of the credit may be applied against corporate income tax for the succeeding nine years.

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