Tax Information

A major indicator of the state's business climate is its tax structure. Arkansas maintains a fair and pro-business tax system.

Arkansas Taxes

Arkansas is among the states with the lowest per capita tax burden.

A. Corporate Charter and Franchise Tax

The Arkansas franchise tax is an annual tax imposed upon domestic corporations for the grant of charter privileges and upon foreign corporations for the privilege of doing business in the state.

Domestic for-profit corporations pay a charter fee and initial franchise tax upon filing articles of incorporation. The franchise tax is calculated by multiplying the number of outstanding capital shares by the par value (if no par stock value, $25 is used) of those shares, then multiplying by 0.0027.Corporations with no authorized capital stock pay an annual tax of $100 regardless of valuation. No corporation shall pay less than $50 or more than $1,075,000. After the initial payment, the franchise tax is due June 1 of each year.

B. Corporate Income Tax

All corporations doing business in the state, whether foreign or domestic, are subject to tax on net income. The rates are as follows:

First	$3,000 - 1%	Next	$14,000 - 5%
Next	$3,000 - 2%	Next	$75,000 - 6%
Next	$5,000 - 3%	In excess of	$100,000 - 6.5%

Pursuant to the Multi-State Tax Compact, income derived from both within and without Arkansas is apportioned for taxation according to the percent of property and payrolls utilized in the state and sales attributable to Arkansas.

A net operating loss can be deducted from gross income and carried forward for a total period of five years succeeding the year of such loss. Operating steel mills may carry forward the loss for ten years.

Accounting Methods

A corporation must calculate its Arkansas income tax liability using the same accounting method for State income tax purposes as for Federal purposes.

For additional Corporate Income Tax information, contact:

Corporation Income Tax Section
P.O. Box 919
Little Rock, Arkansas 72203-0919
(501) 682-4775

Income Tax Withholding

Employers are required to withhold Arkansas individual income taxes on all employees who perform services for an employer doing business in, or deriving income from sources in Arkansas. An employer should request a registration packet from the Arkansas Withholding Section upon hiring the first employee. The packet contains; an employer registration statement, a withholding chart and instructions, and Arkansas Withholding Exemption Certificates. The employer should complete the registration forms and return them with the required Federal Employer Identification Number (FEIN). (To obtain a FEIN, you may request this form by telephone by calling 1-800-829-3676).

For more Employer's Responsibility information, contact:

Revenue Division
Withholding Tax Unit, Room 225
PO Box 8055
Little Rock AR 72203-9941
(501) 682-2212

C. Real Estate/Personal Property Tax

Real Estate/Personal Property Tax
The state has no property tax, but taxes on property are levied annually
by cities and counties. The assessed value of real and personal property
is arrived at taking 20 percent of the market value.

Tax rates for Prescott are as follows:

Prescott School District	35.1 mills
County General	5.0 mills
County Road	3.0 mills
County Library	0.3 mill

Total Prescott Corporate Limits

43.4 mills

For property tax rates elsewhere in Nevada County, the only difference would be the difference, if any, from the School District millage rate.

D. Personal Income Tax

A credit is allowed resident individuals for the amount of income tax paid to any other state not to exceed what the tax would be on out-of-state income if added to the Arkansas income and calculated at Arkansas income tax rates. Please call The Partnership at (870) 887-6208 for more information on Arkansas' personal income tax.

E. Sales and Use Tax

Mary Godwin
Director of Economic Development
Prescott and Nevada County
P.O. Box 307
Prescott, AR 71857
(870) 887-6208
mgodwin@iocc.com