Arkansas Enacts Exemption for Qualifying Data Centers

Arkansas has enacted legislation that creates a sales and use tax exemption for qualifying data center equipment and costs and certain services provided to a data center. The sales and use tax exemption will apply to:

• • • Data center equipment
    • Eligible data center costs
    • Services purchased for the purpose of and in conjunction with developing, acquiring, constructing, expanding, renovating, refurbishing, and operating a qualified data center
    • Electricity used by a qualified data center

To be eligible for the exemption, a data center must:

• • • Invest at least $500 million within five years of the issuance of a certificate of occupancy by the relevant local building authority;
    • Pay an aggregate annualized compensation of at least $1 million to employees within the state;
    • Apply and receive approval from the Arkansas Economic Development Commission (AEDC); and
    • Certify annually to AEDC that it meets the minimum requirements of investment and compensation.

The exemption will be effective on the first day of the calendar quarter following the effective date of the act. Per a legislative impact statement, an effective date of October 1, 2023 is assumed.

(H.B. 1654, Laws 2023; Legislative Impact Statement, Arkansas Dept. of Finance and Administration)