Arkansas, like many other states, bootstraps NAICS industrial classification codes for use in tax and incentive classifications. Having the right NAICS code is a threshold for Arkansas incentives eligibility. It also is used in determining eligibility for the low rate of tax on electricity purchases by manufacturers. Businesses need to carefully think through the NAICS code(s) they use, particularly when operating under novel business models.
In his "Shop Talk" column in the Journal of Multistate Taxation and Incentives, DDH attorney Matthew Boch took a detailed look at the NAICS framework and its implications for tax and incentive classifications nationwide. A reprint of the article is available here.