| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Capital investment--The amount paid to acquire
capital or fixed assets that are purchased for use in the operation
of a qualifying data center or qualifying large data center projects,
and that, for U.S. federal income tax purposes, qualify as Section
179, Section 1245, or Section 1250 property, as those terms are defined
in Internal Revenue Code, §§179(d)(1), 1245(a)(3), and 1250(c),
respectively. Examples include, but are not limited to, land, buildings,
furniture, machinery, and equipment used for the processing, storage,
and distribution of data, and labor used specifically to construct
or refurbish such property. The term does not include:
(A) property purchased before September 1, 2013, for
a qualifying data center;
(B) property purchased before May 1, 2015, for a qualifying
large data center project;
(C) property purchased by a qualifying owner, qualifying
operator, or qualifying occupant from persons or legal entities related
to the purchaser by ownership or common control;
(D) property that is leased under an operating lease;
or
(E) expenditures for routine and planned maintenance
required to maintain regular business operations.
(2) County average weekly wage--The average weekly
wage in a county for all jobs during the most recent four quarterly
periods for which data is available, as computed by the Texas Workforce
Commission, at the time a qualifying owner, qualifying operator, or
qualifying occupant creates a job used to qualify under this section.
(3) Data center--A facility that:
(A) is or will be located in this state;
(B) is or will be specifically constructed or refurbished
for use primarily to house servers, related equipment, and support
staff for the processing, storage, and distribution of data;
(C) will be used by a single qualifying occupant for
the processing, storage, and distribution of data;
(D) will not be used primarily by a telecommunications
provider to house tangible personal property that is used to deliver
telecommunications services; and
(E) has or will have an uninterruptible power source,
generator backup power, a sophisticated fire suppression and prevention
system, and enhanced physical security that includes restricted access,
video surveillance, and electronic systems.
(4) Permanent job--An employment position for which
an Internal Revenue Service Form W-2 must be issued, that will exist
for at least five years after the date the job is created. A permanent
job will be considered to exist for at least five years after the
date the job is created if during the five-year period any vacancy
which occurs is filled within 120 days of the date of vacancy.
(5) Primarily--More than 50% of the time.
(6) Qualifying data center--A data center that the
comptroller certifies as meeting each of the requirements in subsection
(d) of this section.
(7) Qualifying job--
(A) A new, full-time job created by a qualifying owner,
qualifying operator, or qualifying occupant of a qualifying data center
or qualifying large data center project that:
(i) is a permanent job;
(ii) is located in the same county in Texas in which
the associated qualifying data center or qualifying large data center
project is located;
(iii) will provide at least 1,820 hours of employment
a year to a single employee;
(iv) pays at least 120% of the county average weekly
wage, as defined by paragraph (2) of this subsection, for the county
in which the job is located;
(v) is not transferred from one county in Texas to
another county in Texas; and
(vi) is not created to replace a qualifying job that
was previously held by another employee.
(B) The term includes a new employment position staffed
by a third party employer if the employment position meets the requirements
of subparagraph (A) of this paragraph and if a written contract exists
between the third-party employer and a qualifying owner, qualifying
operator, or qualifying occupant that provides that the employment
position is permanently assigned to an associated qualifying data
center or qualifying large data center project.
(8) Qualifying large data center project--A data center
that the comptroller certifies as meeting each of the requirements
in subsection (e) of this section.
(9) Qualifying operator--A person who controls access
to a qualifying data center or qualifying large data center project,
regardless of whether that person owns each item of tangible personal
property located at the qualifying data center or qualifying large
data center project. A qualifying operator may also be the qualifying
owner.
(10) Qualifying owner--A person who owns the building
in which a qualifying data center or qualifying large data center
project is located. A qualifying owner may also be the qualifying
operator.
(11) Qualifying occupant--A person who:
(A) contracts with either a qualifying owner or qualifying
operator to place, or cause to be placed, tangible personal property
at the qualifying data center or qualifying large data center project
for use by the occupant. The qualifying occupant may also be the qualifying
owner or the qualifying operator of the same data center; and
(B) is the sole occupant of the qualifying data center
or qualifying large data center project. A qualifying occupant may
provide data storage and processing services, but may not sublease
to a third party any real or tangible personal property located within
the area of a building designated by the qualifying occupant, qualifying
owner, or qualifying operator as part of the qualifying data center
or qualifying large data center project. For example, a qualifying
occupant may not sell or lease excess servers or server space, including
the provision of dedicated servers, at the qualifying data center
to third parties. If a single occupant leases 150,000 square feet
of space in a building for use as a qualifying data center, that occupant
may not use 100,000 square feet for its own qualifying use and sublease
the remaining 50,000 square feet to a third party, even if the third
party will also use the space as a data center. An occupant may, however,
lease 150,000 square feet of space in a building and, during the certification
process, formally designate 100,000 square feet or more of the space
as the area to be used as its qualifying data center. The occupant
could then sublease the space not designated for use as the qualifying
data center to a third party without causing the qualifying data center
to lose its certification as a qualifying data center. Tangible personal
property purchased for use in the space outside the area designated
for use as a qualifying data center would not qualify for exemption
under this section.
(b) Exemption.
(1) The exemption under this subsection for qualifying
data centers only applies to Texas state sales and use taxes. See
Tax Code, §151.359 (Property Used in Certain Data Centers; Temporary
Exemption). The exemption under this subsection for qualifying large
data center projects applies to Texas state and local sales and use
taxes. See Tax Code, §151.3595 (Property Used in Certain Large
Data Center Projects; Temporary Exemption).
(2) Tangible personal property purchased by a qualifying
owner, qualifying operator, or qualifying occupant for installation
at, incorporation into, or in the case of subparagraph (A) of this
paragraph, use in a qualifying data center or qualifying large data
center project is exempted from the applicable taxes as specified
in paragraph (1) of this subsection if the tangible personal property
is necessary and essential to the operation of the qualifying data
center or qualifying large data center project and is:
(A) electricity. A predominant use study is required
to differentiate between taxable and nontaxable use of electricity
from a single meter unless the qualifying data center or qualifying
large data center project is a stand-alone facility of which the qualifying
occupant is the sole inhabitant. For more information regarding predominant
use studies, refer to §3.295 of this title (relating to Natural
Gas and Electricity). The qualifying owner, qualifying operator, or
qualifying occupant of a stand-alone qualifying data center or qualifying
large data center project is not required to perform a predominant
use study and may, in lieu of tax, supply its utility provider with
a properly completed Exemption Certificate for Qualifying Data Centers
or Qualifying Large Data Center Projects, Form 01-929. Refer to subsection
(h) of this section regarding exemption certificates;
(B) an electrical system;
(C) a cooling system;
(D) an emergency generator;
(E) hardware or a distributed mainframe computer or
server;
(F) a data storage device;
(G) network connectivity equipment;
(H) a rack, cabinet, and raised floor system;
(I) a peripheral component or system;
(J) software;
(K) a mechanical, electrical, or plumbing system that
is necessary to operate any tangible personal property described in
this subsection;
(L) any other item of equipment or system necessary
to operate any tangible personal property described in this subsection,
including a fixture; or
(M) a component part of any tangible personal property
described in this subsection.
(3) The purchase price of qualifying tangible personal
property, including building materials, electricity, and other items,
jointly procured by a qualifying owner, qualifying operator, or qualifying
occupant for installation at, incorporation into, or use in one or
more qualifying data centers or qualifying large data center projects
is to be apportioned among the purchasers for purposes of subsection
(i)(2) of this section, concerning liability in the event of revocation.
(c) Exclusion from exemption. The exemption in subsection
(b) of this section does not apply to:
(1) office equipment or supplies;
(2) maintenance or janitorial supplies or equipment;
(3) equipment or supplies used primarily in sales activities
or transportation activities;
(4) tangible personal property on which the purchaser
has received or has a pending application for a refund under Tax Code, §151.429
(Tax Refunds for Enterprise Projects);
(5) tangible personal property that is rented or leased
for a term of one year or less;
(6) tangible personal property not otherwise exempted
under subsection (b) of this section that is incorporated into real
estate or into an improvement of real estate; or
(7) notwithstanding Tax Code, §151.3111 (Services
on Certain Exempted Personal Property), a taxable service that is
performed on tangible personal property exempted under this section.
(d) Eligibility for certification as a qualifying data
center. The comptroller may certify an applicant facility as a qualifying
data center if the following requirements are met:
(1) the applicants declare on the application for certification
that the facility does or will meet all of the requirements for the
definition of the term "data center" set out in subsection (a)(3)
of this section;
(2) the data center is at least 100,000 square feet
of space located in a single building or portion of a single building;
(3) the qualifying owner, qualifying operator, or qualifying
occupant, jointly or independently, have agreed to, on or after September
1, 2013:
(A) create at least 20 qualifying jobs on or before
the fifth anniversary of the date that the data center is certified
by the comptroller as a qualifying data center; and
(B) make a capital investment of at least $200 million
in that particular data center over a five-year period beginning on
the date the data center is certified by the comptroller as a qualifying
data center. For purposes of this subparagraph:
(i) an expenditure can only be counted toward the capital
investment requirement if invoiced to the qualifying owner, qualifying
operator, or qualifying occupant on or after the date the comptroller
certifies the data center; and
(ii) purchases by a related corporate entity on behalf
of a qualifying owner, qualifying operator, or qualifying occupant
cannot be included in the capital investment calculation; and
(4) the applicant facility does not have an agreement
under which it receives a limitation on appraised value of property
for ad valorem tax purposes under Tax Code, Chapter 313 (Texas Economic
Development Act).
(e) Eligibility for certification as a qualifying large
data center project. The comptroller may certify an applicant facility
as a qualifying large data center project if the following requirements
are met:
(1) the applicants declare on the application for certification
that the facility does or will meet all of the requirements for the
definition of the term "data center" set out in subsection (a)(3)
of this section;
Cont'd... |
