Texas Data Center Tax Incentives Attract Business

Those within the data center industry can benefit from several tax incentives available in Texas.

CyrusOne recently announced the customer benefits to be had at its new facility in Carrollton, Texas. The state boasts significant data center tax incentives, as well as new legislation that affects Carrollton specifically.

The company’s modular data center is a 630,000-square-foot, $45 million facility that CyrusOne hopes to fill quickly with the help of significant customer savings due to state tax incentives.

The city-aimed tax incentive came as part of state legislation passed earlier this year, which eliminates the sales tax and use tax on data center resources, including utilities, infrastructure and network purchases. Furthermore, those within Carrollton also benefit from up to 0.5 percent sales and use tax rebate for customer purchases, which amounts to up to 50 percent of the taxes that the city would receive being returned to the organization.

CyrusOne president and CEO Gary Wojtaszek said the data center tax incentive could create $31 million in savings over a 10 year period for businesses that deploy a large data center in the area.

“These are savings that enable the provider to hire more highly skilled technology positions to the Carrollton data center,” Wojtaszek said. “This all further enhances the ecosystem of technology companies that have already found this to be a highly desirable location to do business.”

Data Center Tax Incentive Eligibility
In order to be eligible for the tax cuts, customers must create 20 new employment opportunities and utilize at least 100,000 square feet of space for data storage, processing and distribution. Additionally, clients must also agree to invest $200 million over five years in a data center facility, stated Texas Wide Open for Business. This comes as part of House Bill 1223, which went into effect September 1, 2013.

These tax cuts are beneficial when it comes to purchasing or refreshing IT equipment, as sales tax on these items is eliminated. As many facilities update or overhaul systems every three to four years, this can add up to significant savings.

In order to receive all the advantages of the tax breaks, customers’ requests must be reviewed by the city council, which goes over each application on an individual basis to determine the percentage of sales tax to be rebated to the organization.

Other Texas Data Center Investors
In addition to the benefits of House Bill 1223, Texas data center investors also have the opportunity to take advantage of House Bill 1841, allowing organizations to provide sale and use tax benefits to customers as well. Texas Wide Open for Business stated that this is because the legislation considers organizations only providing Internet hosting as not “engaged in business” in Texas, thereby relieving the need for payment of these taxes.

Other prominent companies have invested in data center real estate in Texas as well, including IBM. The business recently purchased SoftLayer Technologies, a Dallas-based cloud computing service provider. Additionally, BP constructed a 110,000-square-foot data center in Houston.