Amazon's New Virginia Data Center Gets Many Tax Benefits

While Amazon has given up on its HQ2 office projects in New York, things seem to be going well for Virginia, the other state where the online retailer has promised massive expansion.

A new report by Bloomberg's David Kocieniewski details some of Amazon's dealings with state officials, including tax breaks for the project to build a new data center for its cloud computing unit. Amazon Web Services (AWS).

The AWS representatives reportedly met with the governor and state economic developer, Buddy Rizer, last year. Rizer is the official leader of the state's resounding success in attracting data center operators, including AWS.

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Virginia is one of Amazon's largest and most important places, with a particular county, Loudoun, playing the lead role. Loudoun would host the largest concentration of data centers in the world, thanks to its proximity to a major Internet hub and its low electricity rates.

Amazon retains its data center plans, but has leased millions of square feet on dozens of sites in this county and nearby areas for Vadata Inc., the commercial unit that operates the data centers. Amazon, reported Rich Miller, of Data Center Frontier. Google, Facebook and many others also have data centers in Loudoun.

Among the topics discussed at some of these meetings, there were tax breaks for Amazon. Such a meeting would have taken place between AWS CEO Andy Jassy, ​​Virginia Governor Ralph Northam and the Governor's assistants. At that meeting, Jassy sought assurances as to the continuation of the tax breaks granted by Virginia to the information processing centers, Bloomberg said.

Virginia exempts sales taxes and the use of major data center operators, and these breaks are expected to end in 2035. In fiscal year 2018, the state removed 79 million dollars of taxes on data centers, he said. Michael Neibauer of the Washington Business Journal also reported that the breaks had paid off as the state had generated tax revenues exceeding the budget of $ 66.8 million.

But last year, Amazon would also have benefited from another more controversial tax break.

Although Loudoun is one of the richest counties in the country, the state has designated part of the land that interested Amazon instead of "area of ​​opportunity". An "Opportunity Zone" is a Trump – era program that can offer tax breaks to businesses and developers who invest in communities in economic difficulty.

The state has submitted this land to the program, the Treasury Department has approved it and AWS was under contract for the construction of a data center in the following month, Bloomberg said.

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

An Amazon spokesperson told us: "Any assumption that AWS officials would have collaborated with the Commonwealth of Virginia to designate an area of ​​fiscal opportunity for tax purposes is flawed and erroneous." our renewable energy projects, the AWS Educate program and the benefits of cloud computing for local businesses in the commercial, public and educational sectors. "

And the site chosen for its Virginia HQ2 office was located in Crystal City, Arlington County, which is not in an area of ​​opportunity, said Bloomberg.

It's not that Virginia is unique in its use of the area of ​​opportunity program.

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Many critics of the program say that the rules regarding the areas of opportunity are too lax, that it helps the rich more than the poor and that it accelerates gentrification.

We do not know what other Amazon tax incentives were offered by various government entities when it asked them to compete for its headquarters 2 because Amazon asked government entities to sign confidentiality agreements.

However, Virginia's choices give a glimpse of how Amazon is reducing its tax bills. According to the progressive think tank Institute for Taxation and Economic Policy, he may have paid no federal tax on his profits of $ 11.2 billion last year.

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