Certain Data Centers Exempt from Sales/Use Tax

Certain items necessary to the operation of a data center will qualify for exemption from state sales and use tax under House Bill 1223, effective September 1, 2013. An owner, operator and/or occupant of a data center being constructed or refurbished to be used by a single occupant to house servers and related equipment for processing, storage and distribution of date in Texas may apply for certification to the Comptroller as a qualifying data center.

For certification, applicant must agree to create at least 20 permanent full time qualifying jobs in the county where the center is located and make a capital investment of $200 million or more over a five year period from date of certification.

Depending on the amount of capital investment made in the center by the owner, operator and occupants, whether individually or jointly, applicants will also be eligible to claim an exemption on qualified purchase made for 10-15 years following the date of certifications.

Certification can be revoked if the owner, operator or occupant fails to make the amount of capital investment or create the number of jobs required. Tax will be due on purchases made tax-free in the event of revocation.

Data centers with limits on appraised value of property for property tax do not qualify for exemption. Exemption does not apply to local sales tax.

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