Business

R & D Tax Incentives

Tax credits are intended to provide incentives for university-based research, in-house research of several kinds, and research and development in start-up, technology-based enterprises. It is important for the applicant to understand the different incentives and to select the most appropriate for the eligible research and development activity.

Research and development with universities-Act 182 of 2003 15-4-2708(a)

The incentive for research and development with universities is intended for firms of virtually every size and stage of development, may complement in-house research, and may be combined with in-house research incentives.

The incentive must also adhere to the documentation requirements of 26-51-1104:

The incentives for in-house research are intended for (a) the on-going in-house research programs of mature firms, (b) younger, "targeted" firms engaged in in-house research over limited five-year periods, and (c) emerging firms engaged in strategic research and development over limited five year periods: generally these incentives may not be combined with one another (i.e., with other in-house research incentives), but may be combined with incentives for research with universities.

In-house research by a targeted business - Act 182 of 2003 15-4-2708(c)

The incentive for research and development under programs of the Arkansas Science & Technology Authority is intended for companies in the earliest stages of development and for knowledge-based companies that require a continuing research and development program to remain competitive: generally, this incentive may not be combined with other research and development incentives.

Note
It is the responsibility of the taxpayer to apply for research and development income tax credits offered by Act 182 of 2003 (Consolidated Incentive Act of 2003). Unless otherwise specified, the application and research and development project plan shall be the basis for the department's decision to approve tax credit treatment for research and development expenditures. It is the responsibility of the taxpayer to claim any research and development income tax credits that may have been earned under authority grated by Act182 of 2003. At the discretion of the department, an approved application and project plan may serve as the financial incentive agreement. Claims for research and development tax credits may require the taxpayer to file with its tax return a Certificate of Tax Credit issued by the Arkansas Science and Technology Authority.