Georgia legislature proposes to eliminate high-tech sales tax exemption

Eversheds Sutherland (US) LLP

Eversheds Sutherland (US) LLPOn February 26, 2021, a subcommittee of the Georgia Ways & Means Committee quickly approved HB 428, which proposes to eliminate the current Georgia sales tax exemption for high-technology companies and facilities that invest at least $15 million in eligible computer equipment in Georgia during a calendar year. The exemption has been available to taxpayers in Georgia for over 20 years. The proposed legislation now proceeds to a vote before the full House Ways & Means Committee, where the committee chairman supports the legislation.

In support of the proposal to eliminate the High-Tech Exemption in O.C.G.A. § 48-8-3(68), legislators stated that the exemption has been in effect for long enough, served its intended purposes, and may now be outdated. The proposed legislation would retain the exemption added in 2018 in O.C.G.A. § 48-8-3(68.1) for new data centers that invest at least $100 million to $250 million in a new facility (depending on the size of the county where the facility is located).

The Subcommittee’s discussion did not cite any specific examples or the anticipated fiscal effect of the repeal of the exemption. The proposal was not widely known prior to the subcommittee meeting this morning, and no public comment was heard during the meeting. Eliminating the current High-Tech Exemption would be a significant and startling change to a longstanding Georgia policy that has successfully promoted Georgia as a favorable location for high-technology companies and corporate headquarters.

Businesses should review the proposal in conjunction with HB 594, which would expand the sales tax base to include digital goods.

Eversheds Sutherland Observation: We are discussing contingency plans with several of our clients that would be impacted by this proposal. For more information please contact any member of the SALT team.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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