Data Center Sales and Use Tax Exemption

Tennessee Department of Revenue

Program Type:

Tax Incentive

Eligible Geography:

Tennessee

Summary:

Sales tax exemption for certain hardware and software purchased for a qualified data center. Its purpose is to encourage construction of qualified data centers. Tennessee law provides an exemption for the purchases of computers, computer networks, computer software, or computer systems, and any peripheral devices, including, but not limited to, hardware such as printers, plotters, external disc drives, modems, and telephone units, that are used in the operation of a qualified data center and any repair parts, repair or installation services, warranty or service contracts, and computer software maintenance contracts purchased for such items used in the operation of a qualified data center. Additionally, Tenn. Code Ann. § 67-6-206(c) provides an exemption for backup power infrastructure and cooling equipment used primarily for and necessary to the operation of the qualified data center, as defined by the statute, and provides a 1.5% reduced sales tax rate for the purchase of electricity used by a qualified data center. The taxpayer should mail the completed application to the Department of Revenue at the given address. If the application is approved, the Department will issue the taxpayer a certificate it may use to make sales tax exempt purchases of the qualified items and purchases of electricity at the 1.5% reduced rate used by the qualified data center.

If approved, purchases of electricity purchases are made at a 1.5% reduced rate used by the qualified data center.

Eligible Recipients:

For-Profit Business

Eligible Recipients Detail:

Tennessee Qualified Data Centers.

Eligible Purpose:

Broadband Enabled Devices (General); Broadband-Related Industry

Eligible Purpose Detail:

Minimum capital investment of $100M in real or tangible property or software, owned or leased in the state, that is used in the operation of the data center and 15 new full-timepermanent jobs (for a least 12 consecutive months) paying at least 150% of the state’s avg. occupational wage with minimal health care; investment must be made during a 3 yr. period.