Arkansas has enacted legislation to exclude candy and soft drinks from the definition of “food and food ingredients.” As a result, candy and soft drinks are subject to the full Arkansas sales and use tax rate instead of the 1.5% reduced rate that applies to food and food ingredients, effective January 1, 2018. The enacted legislation also includes definitions for candy and soft drinks. “Candy” is defined as a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” shall not include a preparation containing flour and shall require no refrigeration. “Soft drink” is defined as a nonalcoholic beverage that contains natural or artificial sweeteners. “Soft drink” does not include a beverage that contains milk or milk products, soy, rice, or similar milk substitutes, or that is greater than 50% of vegetable or fruit juice by volume.
In addition, the Arkansas soft drink tax rate is reduced, effective January 1, 2018. The rate will decrease from $2.00 to $1.26 per gallon of soft drink syrup or simple syrup sold in Arkansas. The rate will decrease from 21 cents to 20.6 cents per gallon of bottled soft drinks sold in Arkansas. If a package or container of powder or other base product, other than a syrup or simple syrup, is sold in the state and the powder is used by the retailer to produce a liquid soft drink for sale, the tax rate will decrease from 21 cents to 20.6 cents per gallon of soft drink which may be produced from each package or container by following the manufacturer’s directions.The soft drink tax applies on the wholesale sale of powder or other base to the retailer for sale to the ultimate consumer after the liquid soft drink is produced by the retailer.
Effective January 1, 2018, any simple syrup used in preparing tea is added to the Arkansas soft drink tax exemption. (Act 141 (H.B. 1162), Laws 2017, effective January 1, 2018)