Computer Equipment Used in Certain Virginia Data Centers Exempt

A Virginia retail sales and use tax exemption, beginning July 1, 2010 and ending June 30, 2020, has been enacted for computer equipment purchased or leased for the processing, storage, retrieval, or communication of data, including, but not limited, to servers, routers, connections, and other enabling hardware, provided that such computer equipment is purchased or leased for use in a data center that 1) is located in a Virginia locality, 2) results in a new capital investment of at least $150 million on or after July 1, 2009, and 3) results in the creation of at least 50 new jobs associated with the operation or maintenance of the data center on or after July 1, 2009, provided that such jobs pay at least one and one half times the prevailing average wage in that locality.
Furthermore, the exemption applies to any computer equipment purchased or leased to upgrade, supplement, or replace computer equipment purchased or leased in the initial investment.

Prior to claiming such exemption, any qualifying person claiming the exemption must enter into a memorandum of understanding with the Virginia Economic Development Partnership Authority that at a minimum provides 1) the details for determining the amount of capital investments made and the number of new jobs created, 2) the timeline for achieving the capital investment and new job goals, 3) the repayment obligations should those goals not be achieved, and 4) any conditions under which repayment by the qualifying person claiming the exemption may be required. The exemption does not apply to any otherwise taxable computer software that is sold or leased separately from the computer equipment, nor shall it apply to general building improvements or fixtures. Further rules and regulations apply. (S.B 944, Laws 2009, effective July 1, 2009, applicable as noted)

Posted on May 15, 2009