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Home / Business / Amazon's new Virginia data center is getting a bunch of tax breaks

Amazon's new Virginia data center is getting a bunch of tax breaks



  • Even outside of the deal that Virginia offered to Amazon to expand its operations, the company has been benefiting from tax breaks in the state.
  • Amazon operates a number of data centers – and Virginia offers tax data to the largest data center operators.
  • The state also has designated land in its data center hub as an "opportunity zone," which qualifies Amazon for federal tax breaks, too.
  • Amazon is estimated to pay $ 0 in federal taxes for 2018. This gives some insight into how that works.

While Amazon has bailed on its plans for an HQ2 office in New York, it seems to be moving alongside Virginia, the other state where the online retailer has promised a massive expansion.

A new report from Bloomberg's David Kocieniewski details some of the hush-house dealmaking between Amazon and state officials, particularly regarding tax breaks for its plans to build a new data center for its cloud computing unit, Amazon Web Services.

AWS representatives reportedly with the governor and with the state's economic developer, Buddy Rizer, last year. Rizer is the official overseas state's runaway success in attracting data center operators, including AWS.

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, Loudoun, playing the starring role. Loudoun is said to be home to the largest concentration of data centers in the world, thanks to its proximity to a major internet interconnection hub and its low electricity rates.

Amazon keeps its data center plans under wraps, but it has millions of square feet across dozens of sites in that county and nearby areas of Vadata Inc., the business unit that operates Amazon's data centers, reports Rich Miller at Data Center Frontier. Google, Facebook and many others have data centers in Loudoun, too.

Among the topics discussed were some of those meetings were tax breaks for Amazon. One such meeting reportedly occurred between AWS CEO Andy Jassy, ​​Virginia Governor Ralph Northam, and the governor's aides. In that meeting, Jassy asked for assurances that Virginia's tax breaks for data centers would continue, Bloomberg reports.

Virginia sells and uses tax for the largest data centers operators, and such breaks are scheduled to sunset in 2035. In the state's 201

8 fiscal year, the $ 79 million in data center taxes, it said. But the budget paid off as the state was $ 66.8 million over budget in tax revenues from data centers, too, reports Michael Neibauer of the Washington Business Journal.

But last year, Amazon reportedly also got another, more controversial tax break.

Although Loudoun is one of the richest counties in the nation, the state designated some of the country that Amazon was interested in as an "opportunity zone." An "opportunity zone" is a Trump era program that can provide tax breaks to companies and developers who invest in economically-distressed communities.

The state submitted this country for the program, the Treasury Department approved it, and the following month, AWS was under contract to build a data center there, Bloomberg reports.

Rizer's spokesperson insisted on Bloomberg that Amazon never asked for this particular tax incentive, and Amazon tells Business Insider the same.

An Amazon spokesperson told us, "Any speculation that AWS officials worked with the Commonwealth of Virginia to designate and Opportunity Zone for tax purposes is misguided and incorrect. making in Virginia, including our renewable energy projects, AWS educate program, and the benefits that cloud computing has on local businesses in the commercial, public sector, and education segments. "

And the site it chose for its Virginia HQ2 offices was in Crystal City, which is not in an opportunity zone, Bloomberg also reported.

Not that Virginia is unique in its use of the opportunity zone program.

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too lax, that it helps the rich more than the poor and that urgent gentrification.

We do not know what other tax incentives Amazon was offered by various government entities when it asked them to compete for its HQ2, because Amazon required government entities to sign non-disclosure agreements.

However, Virginia's choices give a little insight into how Amazon reduces its tax bills. It may have paid federal tax on its profit of $ 11.2 billion last year, according to progressive think-tank Institute for Taxation and Economic Policy.


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