Arizona: The Grand Canyon State

Arizona is located in the Southwest of the United States. The Grand Canyon State covers an area of ​​almost 300,000 km². The northeast border of the state is part of the four-country triangle. According to ehuacom, Arizona is home to almost seven million people. 1.4 million of them live in the capital Phoenix.

The Grand Canyon, luxury resorts and golf courses are images that spring to mind when the name Arizona comes up. In recent years, however, the state has also been able to develop into a breeding ground for economic opportunities and high-tech innovations. Today, Arizona is an ideal location for companies that want to do business all over the world.

Entrepreneur magazine has ranked Arizona the number one spot in the United States for starting and growing businesses for the last two years. In a Chief Executive Magazine poll, Arizona was voted the fourth most desirable state in the United States for business.

Arizona Location Map

WELCOMING CULTURE

The President and CEO of the Greater Phoenix Economic Council, Chris Camacho, highlights the positive market atmosphere, the young workforce and the openness of the community. Of these, foreign companies would be addressed.

Phoenix Mayor Kate Gallego also speaks of an open city and a sophisticated entrepreneurial spirit. Companies that choose to locate in Phoenix feel welcomed by the community.

STRONG INTERNATIONALIZATION

Jan Lesher, director of the Arizona Department of Commerce, notes that more and more global companies are recognizing the Grand Canyon State as a place to be. In addition to the access to the US markets, Mexico and South America, he also sees a cultural fit as a reason.

His assessment is indirectly confirmed by Roy Vallee, CEO of Avnet. In addition to the dynamic business climate, his company enjoys a high quality of life in Arizona. In his opinion, only a few locations can offer this mix. This would make it easier for talent to be attracted and retained by the company.

Arizona also offers a unique foreign trade zone program that offers qualifying businesses the lowest effective property tax rates in the United States. Other programs, such as Arizona Job Training, the Enterprise Zone, and other business support programs are contributing significantly to the overall positive trend.

FDI AS AN ESSENTIAL PART OF THE ECONOMY

850 international companies already have a branch in the Grand Canyon State. Thanks to their investments, almost 120,000 jobs have been created. From 2013 to 2018, FDI-related employment increased by 37.6 percent. In comparison, the strong 15.8 percent from the entire private sector seems almost small.

Economic opportunities in Arizona are diverse in every respect. A look at the sectors in which international companies invest makes this clear. The leader is the broad category “other industries” with 116 projects. In IT and software, 32 projects are running and business services take third place with 18 projects. After Canadian companies, Germans have the second most number of ongoing operations in Arizona.

ARIZONA INCOME TAX

Arizona charges an income tax of 2.6-8% depending on income. In addition, federal income taxes are payable.

ARIZONA CORPORATE INCOME TAX

Arizona charges a 4.9% corporate income tax. In addition, federal corporation tax is payable.

ARIZONA SALES TAX

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales tax rate in Arizona

The sales tax in Arizona is 5.6% at the state level. Municipalities or districts charge an average of 2.8% sales tax. Combined, an average of 8.4% is due.

Arizona Nexus Laws & Sales Tax

Effective Date :

October 1, 2019

Transactions included:

Gross proceeds from the sale of tangible personal property or services, or gross income from doing business in the US state. Benefits are included in the threshold. However, sales made via a marketplace are not included.

Treatment of tax-exempt transactions:

Exempt Sales and Exempt Services are included in the threshold

Reason:

Sale only

Sales/Transactions Threshold:

$200,000 (2019)

$150,000 (2020)

$100,000 (2021 and onward)

Evaluation period:

The threshold applies to sales from the previous or current calendar year

Extra information:

  • Registration Requirements : A remote business must register in Arizona by the first day of the month beginning at least 30 days after crossing the Economic Nexus Threshold.
  • TPT Remote Sellers and Marketplace Intermediaries Act HB 2757

Arizona Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

October 1, 2019

Economic Nexus Threshold:

For remote sellers, more than $200,000 in Arizona sales for calendar year 2019; more than $150,000 for calendar year 2020; and more than $100,000 for calendar year 2021 and subsequent calendar years. For marketplace providers, more than $100,000 in Arizona revenue annually. When calculating the threshold:

  • Marketplace sellers should exclude sales through a marketplace when calculating the threshold
  • Marketplace intermediaries should include all sales through the marketplace

Registration requirements:

  • Remote Multichannel Sellers: You must register and collect Arizona sales tax on sales that are not taxed by a marketplace intermediary once you cross the Economic Nexus Threshold.
  • Remote Marketplace Sellers: You don’t need to register with the US state if you only sell through one or two bulk marketplaces. Contact the Arizona DOR for more information.
  • In-State Multichannel Sellers: You must register with the Arizona DOR and collect taxes on sales that are not taxed by a marketplace intermediary.
  • Marketplace Sellers in the US State : You must register. Contact the Arizona DOR for more information.