Arkansas Utility Sales Tax Exemption
Arkansas provides a utility sales tax exemption for manufacturers and industrial processors, to reduce the utility sales tax rate on electricity, natural gas, and water used directly in qualifying production activities. Utilities are exempt from the standard state sales tax rate and instead are subject to a reduced excise tax rate of 0.625% instead of 6.5%. Arkansas Code § 26-53-148.
Qualifications
To qualify for this exemption, businesses must meet the following criteria:
- Businesses must be classified within sectors 31–33 or code 115111 of the North American Industry Classification System (NAICS), or be a generator of electric power classified within sector 22 using combined-cycle gas turbine technology.
- Use electricity, natural gas, or coal directly in the actual manufacturing process.
Arkansas tax information
- Arkansas statute of limitations on tax refund: 3 years
- Arkansas sales tax rate: 6.5%
- Arkansas local sales tax rate: 2.97%
To obtain a utility sales tax exemption in Arkansas, businesses must have separate metering for qualified processes. A sales tax exemption certificate is required from the Arkansas Department of Finance and Administration. ICS can document and demonstrate utility usage for the utility sales tax exemption in the state of Arkansas.