Amazon's New Virginia Data Center Gets Many Tax Benefits



  • Even apart from the agreement that Virginia has proposed to Amazon to expand its activities there, the company benefits from tax breaks in that state.
  • Amazon operates a number of data centers and Virginia offers tax breaks to major data center operators.
  • The state has also designated the land of its data center as "opportunity zone", which also allows Amazon to benefit from federal tax breaks.
  • Amazon is estimated to pay $ 0 federal taxes for 2018. This gives an idea of ​​how it works.

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 secret deals between Amazon and state officials, including tax relief for a new data center for its cloud computing unit , Amazon Web Services.

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 the county and nearby areas for Vadata Inc., the business unit that operates the data centers of the United States. Amazon, reports Rich Miller at the Frontier Data Center. 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 the meeting, Jassy sought assurances about Virginia's continued tax breaks at information centers, reports Bloomberg.

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 reports that the breaks have borne fruit since the state has generated $ 66.8 million in additional tax revenue from the data centers.

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

Rizer's spokesperson insisted Bloomberg that Amazon had never asked for this 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 offices was located in Crystal City, which is not in an area of ​​opportunity, Bloomberg also said.

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

Read: Amazon Web Services exceeds its combined four competitors, the cloud becoming a $ 70 billion market last year.

Many critics of the program say that the rules about opportunities are too lax, that it helps the rich more than the poor, and speeds up gentrification.

We do not know what other Amazon tax incentives were proposed by various government entities when it asked them to compete for its headquarters2, as 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 income tax of $ 11.2 billion last year.


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