Arkansas Code of 1987 (2023) › Title 26 - TAXATION (§§ 26-1-101 — 26-82-119) › Subtitle 5 - STATE TAXES (§§ 26-50-101 — 26-65-108) › Chapter 53 - COMPENSATING OR USE TAXES (§§ 26-53-101 — 26-53-303) › Subchapter 2 - CONTRACTORS (§§ 26-53-201 — 26-53-204) › Section 26-53-203 - Tangible personal property, specified digital products, or a digital code procured outside state for use by contractors

(a)
(1)
All tangible personal property, specified digital products, and digital codes that are procured from without this state for use, storage, distribution, or consumption, including machinery, equipment, repair or replacement parts, materials, and supplies used, stored, distributed, or consumed by a contractor in the performance of a contract in this state, are subject to the compensating tax of four and five-tenths percent (4.5%) of the purchase price as provided by the Arkansas Compensating Tax Act of 1949, §
26-53-101
et seq., or four and five-tenths percent (4.5%) of its market or book value, whichever is greater, if the property has been subjected to prior use before coming to rest for use, storage, distribution, or consumption within this state. The four-and-five-tenths-percent compensating tax is in addition to any other compensating taxes levied by the State of Arkansas.
(2)
The tax is due and payable regardless of whether or not any right, title, or interest in the tangible personal property, specified digital products, or digital code becomes vested in the contractor.
(b)
In the case of leases or rentals of tangible personal property, specified digital products, or a digital code by a contractor for use, storage, distribution, or consumption in this state, the contractor shall report and remit the compensating tax on the basis of rental or lease payments made to the lessor of the tangible personal property, specified digital products, or digital code during the term of the lease or rental, which lease rentals shall be in accordance with written contracts between the lessor and the lessee furnished to the Secretary of the Department of Finance and Administration.
(c)
(1)
This subchapter does not apply in respect to the use, consumption, distribution, or storage of tangible personal property, specified digital products, or a digital code as defined in this chapter for use or consumption in this state upon which a like tax equal to or greater than the amount imposed by this subchapter has been paid in another state, the proof of payment of the tax to be according to rules made by the secretary.
(2)
If the amount of tax paid in another state is not at least equal to or greater than the amount of tax imposed by the Arkansas Compensating Tax Act of 1949, §
26-53-101
et seq., then the contractor shall pay to the secretary an amount sufficient to make the tax paid in the other state and this state equal to the total amount of tax due under Arkansas law.
(3)
No credit shall be given under this section for taxes paid on the property in another state if that state does not grant credit for taxes paid on similar tangible personal property, specified digital products, or digital codes in this state.
Amended by Act 2019, No. 315,§ 3003, eff. 7/24/2019.
Amended by Act 2019, No. 910,§ 3931, eff. 7/1/2019.
Amended by Act 2019, No. 910,§ 3930, eff. 7/1/2019.
Amended by Act 2017, No. 141,§ 59, eff. for tax years beginning on and after 1/1/2018.
Acts 1965, No. 125, § 2; 1967, No. 253, § 1; A.S.A. 1947, § 84-3130; Acts 1997, No. 951, §§ 28-30.