Arkansas Governor Sarah Huckabee Sanders signed House Bill 1654, establishing a sales and use tax exemption to qualified data centers and certain service providers to data centers. The law defines a “qualified data center” as:
- A facility developed, acquired, constructed, expanded, rehabilitated, renovated, repaired, or operated to house a group of networked computer servers in one physical location or in multiple contiguous locations to centralize the storage, management, and dissemination of data and information pertaining to a particular business or classification or body of knowledge
- A facility owned or operated by a qualified firm that:
- Creates a qualified investment of at least $500 million within five years of the issuance of a certificate of occupancy by the relevant local building authority
- Pays an aggregate annual compensation of at least $1 million to employees within the state over the two calendar years following the commencement of operations
- A facility that has received a positive cost-benefit analysis from the Arkansas Economic Development Commission
The gross receipts from the sale of the following are exempt from the gross receipts tax and the compensating use tax:
- Data center equipment
- Computer equipment or software purchased or leased for the processing, storage, retrieval, or communication of data
- Eligible data center costs
- Services purchased for the purpose of and in conjunction with developing, constructing, expanding, renovating, refurbishing, and operating a qualified data center
- Electricity used by a qualified data center
Qualification for the exemption is determined through an application process with the Arkansas Economic Development Commission. Once the application is approved, the facility will receive an approved financial incentive certificate from the Commission. An annual recertification will be required to determine that the facility continues to meet the required investment and compensation levels. The exemption is effective on the first day of the calendar quarter following the effective date of this act, which is the final adjournment date of the Legislature, normally mid-June.
Please contact our Ryan tax specialists below with any questions regarding this legislation.
TECHNICAL INFORMATION CONTACTS:
Landon Julius
Principal
Ryan
303.328.1296
landon.julius@ryan.com
Brian Stromen
Principal
Ryan
612.991.4886
brian.stromen@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Topics
- Landon Julius
- Transaction Tax
- Arkansas