Incentives Offered by the Arkansas Capital Development Act

1. Investors in qualified projects receive a 33.3% state income tax credit on their investment in an approved project.
2. The tax credit can be used to offset up to 50% of the investor's annual state income tax liability.
3. From the date of the investment, the investor has eight years to utilize the tax credit.
4. The credit may be sold/transferred by the investor to another party.
5. Dividends, distributions, and income allocable to the investment in an approved project are exempt from state, county and municipal income tax.
6. A loan to an approved project would not receive the tax credit. HOWEVER, all interest on the loan payments would be state, county and municipal income tax free.

What Sort of Projects Are Eligible for Consideration for This Incentive?

Projects eligible for the credit must first fit the purpose of the act. Secondly, projects that can affirmatively address these two initial criteria are eligible:

1. What is the benefit of the project to Arkansas? Benefit to Arkansas can be objective and/or subjective. Objective benefit would entail demonstrating the potential long-term positive revenue impact to Arkansas by way of job creation, more tax revenue as a result of higher output, etc. Subjective benefit comes from a showing of a potential improvement in the quality of life for Arkansans.
2. Why is a tax credit necessary for this project? This credit is not available for every venture. The purpose of this credit is to help those ventures that, without the credit, find it difficult or impossible to attract investment.