(a)
(1) A local government may levy a tax upon the income of its individual residents and corporations and individuals owning a business within the boundaries of the local government levying the tax, but no tax shall be levied on the income of corporations or other business entities in any local governmental unit unless a like tax is levied on the income of individual residents of such governmental unit.
(2) However, in the event a municipality levies an income tax or other tax authorized by this subchapter, with the exception of the sales and use tax, the county within which such municipality is located may not levy or collect that tax being levied by the municipality within the corporate limits of such municipality.
(b)
(1) For individual taxpayers, the rate of tax on income authorized by this section shall be a single percentage of the income tax payable to the State of Arkansas.
(2)
(A) For all domestic or foreign corporations, the rate of tax on income authorized by this section shall be a percentage of the income tax payable to the State of Arkansas, calculated on an apportionment formula which shall consist of a fraction, the numerator of which is the property factor, plus the payroll factor, plus the sales factor and the denominator of which is three (3).
(B) The sales factor is a fraction, the numerator of which is the total sales of the corporation within the local government during the tax period and the denominator of which is the total sales of the corporation within the state for the same tax period.
(C) The payroll factor is a fraction, the numerator of which is the total amount paid in the local government during the tax period by the corporation for compensation and the denominator of which is the total compensation paid within the state for the same tax period.
(D) The property factor is a fraction, the numerator of which is the average value of the corporation's real and tangible personal property owned or rented and used in the local government during the tax period and the denominator of which is the average value of all the corporation's real and tangible personal property owned or rented and used within the state during the same tax period.
(c) However, a corporation located within the boundaries of a local government and subject to the tax under this section, having no sales, payroll, and property in another local government, shall be permitted the election of being taxed in the same manner as an individual taxpayer under this section.
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