Arkansas: The Natural State

Located in the southern United States, Arkansas covers an area of ​​almost 140,000 km² and is home to three million people. According to ehuacom, Arkansas is unsurprisingly nicknamed “The Natural State” due to Hot Spring National Park, seven protected properties, five National Natural Landmarks and 52 state parks.

The government around Governor William Asa Hutchinson has taken a number of steps since 2015 to remove bureaucratic hurdles that made it difficult to found a start-up or to relocate and expand.

A good example of Arkansas’ transformation is Bentonville, which has evolved from a sleepy town into a center for commerce and culture. In 2019, it was the fastest growing city in the United States according to the US Census Bureau.

“The Natural State” can not only score with the third lowest business costs in the country. The state also offers competitive business incentives to attract investors and encourage job creation.

Arkansas Location Map

MUCH PRAISE FROM EXECUTIVES OF LOCAL COMPANIES

A positive development of the state is also confirmed by the trade journal “Area Development”. There, Arkansas already ranked 14th in the 2019 list of “Top States for Doing Business”. In a nationwide comparison, according to the Tax Foundation, the dollar has the highest relative value here. Accordingly, you get more bang for your buck in Arkansas than anywhere else in the United States.

Executives from local companies appreciate the ease of doing business in the “Natural State”. Hytrol’s President, David Peacock, shares the history of his company’s success in Arkansas, where it has been based since 1962. From the initial 28 employees, the number has grown to more than 1,200. The expansion with new production facilities went smoothly and, in addition to a high level of satisfaction with the local workforce, he particularly appreciates the positive local business climate.

Jessica Breaux (Manager of Economic Development at Amazon) raves about the support the company is receiving locally. A number of other large companies such as Walmart or Dillard’s have also settled in Arkansas and are growing successfully in the “Natural State”. Nestlé, Camfil, Colson Caster and Nice-Pak recently announced business expansions.

TOP DESTINATION FOR WORKERS IN MEDIUM-SIZED MARKETS

For a number of years it has been observed that metropolises are becoming less attractive and that medium-sized markets are gaining in attractiveness. These markets offer both private individuals and companies the opportunity to increase the quality of life despite cost reductions.

Arkansas is benefiting enormously from this development, as it can meet the demands of professionals. Little Rock, Arkansas’ capital, can be used as evidence for this. In 2020, Little Rock saw an 82 percent increase in home hunting compared to 2019. This is the sixth highest value in the US.

In Northeast Arkansas, Jonesboro is experiencing rapid growth in jobs for skilled workers. According to the Emsi Talent Attraction Scorecard, Jonesboro is in the top 30% of cities with the highest growth in skilled jobs over the period 2015-2019.

Arkansas abounds with opportunities for businesses and professionals looking to establish themselves in a mid-sized market. If you are considering incorporating, relocating or expanding your business, Arkansas may be the right choice for you.

ARKANSAS INCOME TAX

Arkansas charges an income tax of 2-5.9% depending on income. In addition, federal income taxes are payable.

ARKANSAS CORPORATE INCOME TAX

Arkansas collects a 6.5% corporate income tax. In addition, federal corporation tax is payable.

SALES TAX IN ARKANSAS

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 Arkansas

The sales tax in Arkansas is 6.5% at the state level. Municipalities or districts charge an average of 3% sales tax. Combined, an average of 9.5% is due.

Arkansas Nexus Laws & Sales Tax

Effective Date:

July 1, 2019

Transactions included:

Aggregated sales of taxable tangible personal property, taxable services, digital code, or certain digital products subject to Arkansas sales or use tax that are shipped into the US state. Sales made through a registered marketplace are not included.

Treatment of tax-exempt transactions:

Exempt Sales and Exempt Services are not included in the threshold

Reason:

sales or transactions

Sales/Transactions Threshold:

$100,000 or 200 transactions

Evaluation period:

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

Extra information:

  • Registration Requirements: Arkansas did not specify how quickly a remote business must register once it crosses the Economic Nexus Threshold. However, this could already happen with the next transaction.
  • Sales and Use Tax for Remote Sellers SB576

Arkansas Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

July 1, 2019

Economic Nexus Threshold:

At least 200 transactions or more than $100,000 in total sales in Arkansas in the previous or current calendar year. When calculating the threshold:

  • Remote sellers should exclude sales made through a bulk marketplace
  • Marketplace intermediaries should include all sales through the marketplace

Registration requirements:

  • Remote Multichannel Sellers: You must register and collect your Arkansas sales tax on sales that are not taxed by a Marketplace Agent once you cross the Economic Nexus Threshold.
  • Remote Marketplace Sellers: You may not need to register with the US state once you cross the Economic Nexus Threshold. Contact the Arkansas Department of Finance and Administration (DFA) for more information.
  • In-State Multichannel Sellers: You must register with the Arkansas DFA and collect taxes on sales that are not taxed by a marketplace intermediary.
  • Marketplace Vendors in the US State: You will likely need to register. Contact the Arkansas DFA for more information.