Purchases to Replace or Repair Manufacturing Equipment

ARKANSAS – A partial refund of sales and use tax will be allowed effective July 1, 2014 on machinery and equipment purchased to modify, replace or repair existing machinery or equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging articles of commerce at a manufacturing or processing plant or facility.

Refunds will also apply to services relating to the initial installation, alteration, addition, cleaning, refinishing, replacement or repair of the machinery or equipment.

The refund will be allowed for taxes greater than $4.875%. The excise tax under Amendment 75 and Amendment 91 are not subject to refund. In order to claim the refund, the taxpayer must hold a direct pay permit and claim the tax refund under the permit.

INCREASED REFUND FOR MAJOR MAINTENANCE AND IMPROVEMENT PROJECT: A taxpayer going through major maintenance and improvement project may be eligible for a 100% tax refund on purchases to replace or repair manufacturing machinery and equipment. Taxpayer must enter into a financial incentive agreement with the Arkansas Economic Development Commission (AEDC) for the project and must expend at least $3 million on an approved project.

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