Ark. Code Ann. § 26-53-112 (2026)
Exemptions generally
There are specifically exempted from the taxes levied in this subchapter:
- Property or services, the storage, use, distribution, or consumption of which this state is prohibited from taxing under the United States Constitution or laws or the Arkansas Constitution or laws; and
- Sales of tangible personal property, specified digital products, a digital code, or services on which the tax under the Arkansas Gross Receipts Act of 1941, § 26-52-101 et seq., is levied and any tangible personal property, specified digital products, digital codes, or services specifically exempted from taxation by the Arkansas Gross Receipts Act of 1941, § 26-52-101 et seq., and legislation enacted subsequent to the Arkansas Gross Receipts Act of 1941, § 26-52-101 et seq.
History. Acts 1949, No. 487, § 6; 1971, No. 222, § 3; A.S.A. 1947, § 84-3106; Acts 2003, No. 1273, § 22; 2017, No. 141, § 50.
Amendments. The 2017 amendment, in (2), inserted “specified digital products, a digital code” and “specified digital products, digital codes”.
Effective Dates. Acts 2017, No. 141, § 63, as amended by Acts 2017, No. 596, § 1: “Sections 2 through 61 of this act are effective for tax years beginning on and after January 1, 2018.”
Research References
ALR.
Parts and supplies used in repair as subject to sales and use taxes. 113 A.L.R.5th 313.
Case Notes
Constitutionality.
This section is not unconstitutional on the ground that General Assembly in granting exemptions acted in an arbitrary manner. Teague v. Scurlock, 223 Ark. 271, 265 S.W.2d 528 (1954).
Construction.
Tax exemption provisions must be strictly construed. C.J.C. Corp. v. Cheney, 239 Ark. 541, 390 S.W.2d 437 (1965).
Any tax exemption provision must be strictly construed against the exemption, and to doubt is to deny the exemption. S.H. & J. Drilling Corp. v. Qualls, 268 Ark. 71, 593 S.W.2d 178 (1980); Qualls v. Georgia-Pacific Corp., 269 Ark. 426, 602 S.W.2d 646 (1980).
Appeals.
On appeal, the Supreme Court reviews tax exemption cases de novo and does not reverse a finding of fact unless it is clearly against the preponderance of the evidence. S.H. & J. Drilling Corp. v. Qualls, 268 Ark. 71, 593 S.W.2d 178 (1980).
Burden of Proof.
Since taxation is the rule and exemption the exception, the burden is on taxpayers to clearly show they are entitled to exemption from the use tax. Cheney v. Georgia-Pacific Paper Corp., 237 Ark. 161, 371 S.W.2d 843 (1963).
There is a presumption in favor of the taxing power of the state, and a claimant has the burden to clearly establish any right to an exemption. C.J.C. Corp. v. Cheney, 239 Ark. 541, 390 S.W.2d 437 (1965).
Taxpayer has the burden of clearly establishing an exemption beyond a reasonable doubt. S.H. & J. Drilling Corp. v. Qualls, 268 Ark. 71, 593 S.W.2d 178 (1980).
Gross Receipts Act.
The exception from the use tax found in this section exempts only tangible personal property specifically exempted by the Arkansas Gross Receipts Act, § 26-52-101 et seq.; the items to be exempted are specifically described and identified in that chapter. Technical Servs. of Ark., Inc. v. Pledger, 320 Ark. 333, 896 S.W.2d 433 (1995).
The exemption for the “gross proceeds derived from sales” does not mean an exemption for tangible personal property simply because it is used in the conduct of the business. Technical Servs. of Ark., Inc. v. Pledger, 320 Ark. 333, 896 S.W.2d 433 (1995).
Items Exempted.
Disposable paper cups brought by carbonated beverage company for use in marketing soft drinks were exempt from use tax as a purchase for resale. Hervey v. Southern Wooden Box, Inc., 253 Ark. 290, 486 S.W.2d 65 (1972).
Evidence of no intent to preserve title or claim to cardboard containers and that initial purchase was intended to be for later sale entitled taxpayer to exemption. Ark. Beverage Co. v. Heath, 257 Ark. 991, 521 S.W.2d 835 (1975).
Where a bottled water seller sold only to distributors, not directly to consumers, and its contracts with the distributors provided that it would sell bottles to the distributors at cost, the transactions fell within the sales tax exemption of sales for resale, which is carried forward into the use tax law. Ragland v. Mountain Valley Spring Co., 287 Ark. 4, 696 S.W.2d 710 (1985).
Items Not Exempted.
Where most wooden cases were returned to soft drink seller, the cases were for the seller's own consumption or use, not a sale for resale, and cases were not exempt from use tax. Hervey v. Southern Wooden Box, Inc., 253 Ark. 290, 486 S.W.2d 65 (1972).
Evidence that purchase of bottles was not intended and that there was no sale or resale did not entitle beverage manufacturer to exemption from use tax. Ark. Beverage Co. v. Heath, 257 Ark. 991, 521 S.W.2d 835 (1975).
Where chlorine is used in manufacture of bromine, the chlorine does not become a part of the bromine, but quite the opposite, the chlorine takes something from the bromine, becomes chloride, and is discarded as worthless; thus it is at best consumed in the manufacturing process, not resold to the purchaser as tangible property, and is subject to use tax. Great Lakes Chem. Corp. v. Wooten, 266 Ark. 511, 587 S.W.2d 220 (1979).
Preprinted advertising supplements are not a component part of the newspapers in which they appear and are not exempt from use tax as “newspapers” as that term is used in § 26-52-401 and incorporated in subdivision (2) of this section. Ragland v. K-Mart Corp., 274 Ark. 297, 624 S.W.2d 430 (1981).
Cited: American Television Co. v. Hervey, 253 Ark. 1010, 490 S.W.2d 796 (1973); Heath v. Midco Equip. Co., 256 Ark. 14, 505 S.W.2d 739 (1974); Ragland v. General Tire & Rubber Co., 297 Ark. 394, 763 S.W.2d 70 (1989).