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For Immediate Release
September 17, 2007
Arkansas Gives Manufacturers a Break – Cuts Tax Rate for Gas and
Electricity Used in Manufacturing
Effective
July 1, 2007, the Arkansas Department of Finance and Administration has
reduced from 6% to 4.5%, the sales and use tax rate on the sale of natural
gas and electricity to a manufacturer for use or consumption directly in
the actual manufacturing process. Local tax rates remain in effect.
Effective July 1, 2008, the rate is further reduced to 4%, plus any local
rates in effect at that time.
Natural gas and electricity that are subject to the
reduced tax rate must be separately metered from any natural gas and
electricity used for any other purpose by the manufacturer. Arkansas
defines a manufacturer as a manufacturer as classified in sectors 31
through 33 of the North American Industry Classification System (NAICS),
in effect as of January 1, 2007.
The seller of natural gas or electricity should obtain
a certificate from the consumer certifying that the consumer is eligible
to purchase the natural gas or electricity at the reduced tax rate.
The Arkansas General Assembly determined that the
current sales and use taxes on utilities consumed by manufacturers located
in the state were at a competitive disadvantage, and the change in rates
is intended to address the problem to prevent the loss of manufacturing
jobs to other states that provide lower taxes on utilities consumed in
manufacturing.
If you would like additional
information on this topic or have any questions,
please contact the taxdesk@thesaltgroup.com
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