Georgia Additional High-Technology Exemption Created

Georgia has enacted a temporary sales and use tax exemption for high-technology data centers applying to transactions from July 1, 2018, until December 31, 2028. The bill for the exemption is found in House Bill 696. The exemption applies to the sales and leases of high-technology data center equipment that will be incorporated or used in a high-technology data centers. The prior $15 million annual exemption is still applicable alongside the new exemption. Qualifying applicants must meet (1) minimum investment requirements; (2) exemption certificate requirements; (3) informational requirements; and (4) reporting requirements.

Minimum investment requirements, To qualify for the exemption, the exemption requires (a) the creation of 20 new “quality jobs;” and (b) the following expenditures on the high-technology data center’s design, construction, and equipment within seven years between July 1, 2018, and December 31, 2028: (1) $250 million in counties of greater than 50,000; (2) $150 million in counties of 30,000 – 50,000; and (3) $100 million in counties of fewer than 30,000.

The commissioner may require any information necessary to determine if the center follows its investment budgeting plan to meet its minimum investment threshold. The commissioner will require information showing if the center has met its minimum investment threshold within 60 days after the end of the seventh year after its exemption start date. If the center fails to meet its threshold after the seventh year, then they must repay the exempted taxes within 90 days after notification of the failure.

Exemption certificate requirement. An exemption certificate from the commissioner to claim the exemption is required. A surety bond of up to $20 million may be required to obtain the exemption certificate. The commission can revoke the exemption certificate any time if it is determined the data center is unlikely to meet its minimum investment threshold. Data centers can file applications on or after January 1, 2019, and choose an exemption start date on or after July 1, 2018.

Informational requirements. Each data center issued the exemption certificate must provide a list of high-technology data center customers deploying high-technology data center equipment in its facility and must notify the commissioner within 30 days of any change to the list. The data center must also report to the commissioner annually the amount of taxes exempted, the number of new quality jobs, and the total payroll resulting from construction, maintenance, and operation in and on its facility during the preceding year.

Reporting Requirements. A data center issued the exemption certificate cannot claim certain income tax credits authorized under O.C.G.A. §48-7-40 through §48-7-40.33 or O.C.G.A. §36-62-5.1. For periods from July 1, 2018, forward for which a data center has not yet applied for and received the exemption certificate, it can file a tax refund claim for qualifying purchases.

If you have erroneously remitted taxes on qualifying high-technology data center equipment after the effective exemption date of July 1, 2018, you may qualify for a tax refund. To apply for a tax refund with the Georgia Department of Revenue, fill out the applicable ST-12 Claim for Refund.