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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
commerce authority; data centers
Purpose
Includes as a deduction from the personal property rental classification tax base, leased or rented computer data center equipment that is certified by the Arizona Commerce Authority (ACA).
Background
The Legislature in 2013, established the Computer Data Center (CDC) Program. The objective of the CDC Program (Program) is to encourage CDC operation and expansion in Arizona. The Program seeks to accomplish this objective by providing transaction privilege tax (TPT) and use tax exemptions at the state, county and local levels, on qualifying purchases of CDC equipment. The Program is administered by the ACA in conjunction with the Arizona Department of Revenue.
The TPT and use tax exemptions provided by the Program are available if all of the following are satisfied:
1) an applicant submits an application for CDC certification and receives a letter of certification from the ACA;
2) the CDC owner, operator or qualified colocation tenant collectively satisfy the applicable capital investment threshold in a timely manner:
a) if the CDC facility is located in either Maricopa County or Pima County, a capital investment of at least $50 million must be made within five years of the date of the CDC’s certification;
b) if the CDC facility is located in a county other than Maricopa County or Pima County, a capital investment of at least $25 million must be made within five years of the date of the CDC’s certification; or
c) in the case of a pre-2013 CDC, regardless of location, a capital investment of at least $250 million must have been made during the period between September 1, 2007, and August 31, 2013;
3) the applicant remits the requisite processing fee; and
4) all relevant parties furnish evidence of registration under the federal E-Verify Program (ACA Program).
Taxing jurisdictions have been interpreting enabling in different ways. As such, some jurisdictions are, and some are not currently collecting the tax. Therefore, it is difficult to quantify the fiscal impact to the state General Fund of this legislation.
Provisions
1. Includes as a deduction from the personal property rental classification tax base CDC equipment leased or rented to the owner, operator or qualified colocation tenant of a CDC that is certified by the ACA.
2. Includes property, regardless of whether owned, leased, licensed or used by the owner or operator pursuant to a contract, used to outfit, operate or benefit a CDC in the definition of CDC equipment.
3. Eliminates enabling software from the definition of CDC equipment and instead includes software maintenance and software support.
4. Makes technical and conforming changes.
5. Becomes effective on the general effective date, retroactive to September 13, 2013.
Prepared by Senate Research
February 11, 2019
CS/kja