On April 1, 2019, the Georgia Department of Revenue issued Policy Bulletin SUT-2019-01, providing guidance on the High-Technology Data Center Equipment Sales and Use Tax Exemption and extending the ability to claim the exemption to a data center’s customers.
Background
Enacted in 2018 through House Bill 696, Georgia created a sales and use tax exemption for high-technology data centers. That exemption also permits data center customers to claim a sales tax exemption on qualifying property that is co-located in a third-party data center. For the period July 1, 2018, through Dec. 31, 2028, qualifying high-technology data centers and their customers can apply for an exemption certificate for the purchase of equipment to be incorporated or used in a qualifying data center. Data centers must obtain a $2 million bond prior to approval of an exemption certificate.
In order to qualify for the exemption certificate, data centers must submit documentation showing that they will create and maintain 20 new jobs as well as meet certain statutory investment thresholds.
A “high-technology data center” includes a facility, campus of facilities, or array of interconnected facilities in this state that is developed to power, cool, secure, and connect its own equipment or the computer equipment of high-technology data center customers.
Qualifying data centers must obtain a specific exemption certificate from the commissioner. Applications were first accepted on Jan. 1, 2019.
Policy bulletin
The policy bulletin addresses a number of common questions that the department has received from taxpayers in the last few months addressing how to apply for the exemption, required documentation and annual compliance responsibilities.
The bulletin clarifies that the customers of a data center may also apply for the exemption once the department has approved the data center’s application for exemption. Once a data center is approved, its customers can apply for their own exemption certificate by submitting documentation showing that they have contracted for services with an approved data canter for a period of at least 36 months.
Takeaways
Georgia-based data centers and customers of those data centers should consider eligibility for the High-Technology Data Center Equipment Sales and Use Tax Exemption.
