                                 CODE OF VIRGINIA

APPORTIONMENT; TAXPAYERS WITH ENTERPRISE DATA CENTER OPERATIONS (§ 58.1-422.2)

A. For taxable years beginning on or after July 1, 2016, the Virginia taxable
income of taxpayers with enterprise data center operations, excluding income
allocable under § 58.1-407, shall be apportioned within and without the
Commonwealth as follows:

   1. From July 1, 2016, until July 1, 2017, by multiplying such income by a
   fraction, the numerator of which is the property factor plus the payroll
   factor plus quadruple the sales factor and the denominator of which is six,
   except that when the sales factor does not exist, the denominator of the
   fraction shall be the number of existing factors, and when the sales factor
   exists but the payroll factor or property factor does not exist, the
   denominator of the fraction shall be the number of existing factors plus
   three; and

   2. From July 1, 2017, and thereafter, by multiplying such income by the sales
   factor.

B. As used in this section:
			&#8220;Enterprise data center operations&#8221; means operations that (i)
physically house information technology equipment such as servers, switches,
routers, data storage devices, or related equipment; (ii) manage and process
digital data and information to provide application services or management for
data processing, such as web hosting, Internet, intranet, telecommunication, and
information technology; (iii) are developed and owned by the taxpayer; and (iv)
are operated by the taxpayer or any of its affiliates substantially for their
own use.

C. The provisions of this section requiring an apportionment formula for
taxpayers with enterprise data center operations shall apply only to taxpayers
that have entered into a memorandum of understanding with the Virginia Economic
Development Partnership Authority on or after July 1, 2015, to make a new
capital investment of at least $150 million in an enterprise data center in the
Commonwealth on or after such date. The apportionment formula under this section
shall apply to such taxpayers beginning with the taxable year for which the
Virginia Economic Development Partnership Authority provides a written
certification to the taxpayer that the new capital investment has been
completed.

D. The General Assembly of Virginia finds that capital investment in data
centers is essential to the continued fiscal health of the Commonwealth. In this
modern economy, states often compete for quality data centers. Accordingly, the
provisions of subsection C relating to capital investment in enterprise data
centers are integral to the purpose of this section. If any provision of this
section is for any reason held to be invalid or unconstitutional by the decision
of a court of competent jurisdiction, that provision shall not be deemed
severable.

E. Any eligible company, as defined in &#xA7; 58.1-405.1, that apportions its
income pursuant to this section may subtract the value of its sales in the
Commonwealth during the taxable year from the numerator of the ratio in
subdivision A 2. Such eligible company may make such modification for the
taxable year in which it first becomes eligible and for the six subsequent,
consecutive taxable years, except for any year in which the eligible
company&#8217;s (i) total, cumulative new capital investment falls below the
applicable initial threshold or (ii) number of new jobs falls below the
applicable initial threshold.

HISTORY: 2015, cc. 92, 237; 2018, cc. 801, 802.