Data Centers Sales & Use Tax Exemptions

North Carolina Department of Revenue

Program Type:

Tax Incentive

Eligible Geography:

North Carolina

Summary:

The Data Center Sales and Use Tax Exemptions allows for reduced rate allowances on certain parts, accessories and construction supplies for eligible industries and manufacturing processes. The program's objective is to provide incentive opportunities that support data centers within North Carolina. North Carolina provides three sales and use tax exemptions for purchase of the following items related to data centers and their operations:
1. Electricity and support equipment purchased for a “Qualifying Data Center”
2. Electricity and certain business property purchased for an “Eligible Internet Data Center”
3. Computer software at a “Data Center”

Eligible Recipients:

For-Profit Business

Eligible Recipients Detail:

“Data Center” is defined as: A facility that provides infrastructure for hosting or data-processing services and is concurrently maintainable. The power and cooling systems serving the computer equipment must include redundant capacity components and multiple distribution paths. Although the facility must have multiple distribution paths serving the computer equipment, a single distribution path may serve the computer equipment at any one time.

Eligible Purpose:

Broadband Enabled Devices (General); Broadband-Related Industry

Eligible Purpose Detail:

Purchases of electricity for use at a qualifying data center and the purchase of data center support equipment to be located and used at such a facility is exempt from sales tax.

“Data center support equipment” is property that is capitalized for tax purposes and used for one of the following purposes:

-Providing service or function included in the business of an owner, user or tenant of the data center;
-The generation, transformation, transmission, distribution or management of electricity, including exterior substations, generators, transformers, unit substations, uninterruptible power supply systems, batteries, power distribution units, remote power panels and other capital equipment for these purposes;
-HVAC and mechanical systems, including chillers, cooling towers, air handlers, pumps and other capital equipment used for these purposes;
-Hardware and software for distributed and mainframe computers and servers, data storage devices, network connectivity equipment and peripheral components and equipment, or
-Providing related computer engineering or computer science research.

Other Eligibility Criteria:

A “qualifying data center” must meet the following two conditions:

-The Secretary of Commerce must have made a written determination that at least $75 million in private funds has been or will be invested by one or more owners, users or tenants of the data center. Such funds must have been invested within five years of the first real or tangible property investment in the facility. Real and tangible investments in the data center that were made prior to Jan. 1, 2012 may not be included in the investment required.
-The data center must meet county wage standard and health insurance requirements.

Funding Match/Terms:

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