Arkansas Code of 1987 (2023) › Title 15 - NATURAL RESOURCES AND ECONOMIC DEVELOPMENT (§§ 15-1-101 — 15-76-324) › Subtitle 1 - DEVELOPMENT OF ECONOMIC AND NATURAL RESOURCES GENERALLY (§§ 15-1-101 — 15-14-108) › Chapter 4 - DEVELOPMENT OF BUSINESS AND INDUSTRY GENERALLY (§§ 15-4-101 — 15-4-3910) › Subchapter 20 - DIGITAL PRODUCT AND MOTION PICTURE INDUSTRY DEVELOPMENT ACT OF 2009 (§§ 15-4-2001 — 15-4-2014) › Section 15-4-2007 - Application for tax incentive

(a)
(1)
To apply for the tax incentives provided under this subchapter, a production company shall submit an application for a tax incentive and provide an estimate of total expenditures to be made in Arkansas in connection with the production.
(2)
The application for a tax incentive and estimate of expenditures required under subdivision (a)(1) of this section shall be filed with the Arkansas Economic Development Commission and approved by the Director of the Arkansas Economic Development Commission as eligible for the tax incentive provided by this subchapter before the commencement of production in Arkansas.
(b)
(1)
If an application for a tax incentive is approved under subsection (a) of this section, the production company and the director shall sign a financial incentive agreement.
(2)
(A)
The financial incentive agreement shall define the incentives to be received and the start and end date of the project.
(B)
The financial incentive agreement shall include the:
(i)
Effective date of the financial incentive agreement;
(ii)
Term of the financial incentive agreement, which shall be calculated from the date the financial incentive agreement is signed by the production company and the director;
(iii)
Incentive for which the production company may qualify;
(iv)
Investment threshold requirements necessary to qualify for eligibility;
(v)
Production company's responsibilities for certifying eligibility requirements;
(vi)
Production company's responsibilities for failure to meet or maintain eligibility requirements; and
(vii)
Whether the tax incentive in the agreement is for a rebate under §
15-4-2008
or a tax credit under §
15-4-2012
.
(c)
At the time the production company registers and provides the estimate of expenditures to the commission, the production company also shall designate a member or representative to work with the commission and the Film Office on the reporting of expenditures and other information necessary to qualify for the tax incentives.
(d)
No later than one hundred eighty (180) days after the last production expenses or costs are incurred in the production of a qualified production, the production company shall:
(1)
Apply to the commission for a production tax-incentive certificate; and
(2)
Provide a final expenditure report that includes the amount of the production company's production expenses or costs.
(e)
(1)
Production companies are encouraged to make payments for production and postproduction expenses from a checking account from an Arkansas financial institution.
(2)
Direct cash payments by a production company to Arkansas vendors, businesses, or citizens hired as cast or crew that are accompanied by receipts may be allowed if the sum of the cash payments does not exceed forty percent (40%) of the total verifiable expenditures.
(3)
The following are eligible expenditures:
(A)
Per diem expenditures by the cast or crew for lodging when accompanied by receipts; and
(B)
Fringe contributions being paid for work performed in this state, including:
(i)
Health benefits;
(ii)
Pension contributions;
(iii)
Welfare contributions;
(iv)
Stipends; and
(v)
Living allowances.
(f)
Expenditure reports also shall include information as required by the Revenue Division of the Department of Finance and Administration to ensure compliance with this subchapter.
(g)
Payments for salaries or wages shall be eligible for the tax incentive if they are reported to the division and are subject to state income taxes.
(h)
(1)
If approved by the director, the employment tax incentive under subsection (g) of this section also entitles a state-certified production to an additional tax incentive for employing full-time residents of Arkansas.
(2)
The employment tax incentive under subsection (g) of this section authorizes an additional credit of ten percent (10%) for the aggregate payroll of salaries and wages to Arkansas residents who are below-the-line employees of the state-certified production.
(3)
The veteran hire tax credit under §§
15-4-2005
and
15-4-2006
also entitles a state-certified production to receive an additional tax credit for employing veterans.
(i)
If approved by the director, the tax incentives under subsections (g) and (h) of this section may include the first five hundred thousand dollars ($500,000) of a highly compensated individual's salary.
(j)
Payments for penalties or fines, payments to nonprofit organizations, and payments to federal and state entities that do not pay state taxes are not eligible.
(k)
If a production company hires a payroll service company to handle the payroll of a production, the payroll payments otherwise allowable may be allowed as eligible expenditures if all eligible income payments to employees and independent contractors done through the payroll service are subject to Arkansas state income taxes.
(l)
(1)
(A)
Within two (2) weeks after principal photography begins, the production company shall begin filing weekly expenditure reports.
(B)
Failure to file weekly expenditure reports may result in a delay in the disbursement of the tax incentives provided in §§
15-4-2005
and
15-4-2006
.
(2)
The weekly expenditure report shall be filed in accordance with but shall not be limited to the following:
(A)
Direct cash payments by the production company to Arkansas vendors, businesses, or citizens hired as cast or crew that are accompanied by receipts shall be allowed if the sum of those cash payments does not exceed forty percent (40%) of the total verifiable expenditures;
(B)
Per diem expenditures by cast or crew, or both, for lodging, when accompanied by receipts, shall be allowed as eligible expenditures; and
(C)
Expenditure reports shall include without limitation:
(i)
Check identification number;
(ii)
Date of payment;
(iii)
Name of payee;
(iv)
Address of payee;
(v)
Amount paid; and
(vi)
Other information the division deems necessary to ensure compliance with this subsection.
(m)
When a production company hires a food catering service company that is located outside the state, payments otherwise allowable that are made by the out-of-state food catering service to food businesses located in Arkansas shall be allowed as eligible expenditures.
(n)
(1)
Upon completion of filming or production, or both, in Arkansas, the production company shall file an application for a tax incentive allowed under this subchapter.
(2)
The application for a tax incentive shall include a proof of performance expenditure list that provides the total amount of expenditures that were made in the state in connection with the filming or production, or both, of a film and digital product that complies with this subchapter.
(3)
When filing the application for a tax incentive under subdivision (n)(1) of this section, the production company shall provide a final expenditure report that includes the amount of the production company's production expenses or costs.
Amended by Act 2023, No. 204,§ 6, eff. 8/1/2023.
Amended by Act 2023, No. 204,§ 5, eff. 8/1/2023.
Amended by Act 2021, No. 797,§ 7, eff. 7/28/2021.
Amended by Act 2021, No. 797,§ 6, eff. 7/28/2021.
Amended by Act 2021, No. 797,§ 5, eff. 7/28/2021.
Amended by Act 2021, No. 797,§ 4, eff. 7/28/2021.
Amended by Act 2021, No. 474,§ 2, eff. 7/28/2021.
Amended by Act 2019, No. 367,§ 7, eff. 7/24/2019.
Amended by Act 2019, No. 367,§ 6, eff. 7/24/2019.
Amended by Act 2019, No. 367,§ 5, eff. 7/24/2019.
Amended by Act 2019, No. 367,§ 4, eff. 7/24/2019.
Amended by Act 2019, No. 910,§ 383, eff. 7/1/2019.
Amended by Act 2013, No. 496,§ 7, eff. 8/16/2013.
Acts 1997, No. 919, § 6; 2009, No. 816, § 1.