1.5% sales tax savings, Apple's Remote Data Center Receiving Opportunity

GigaOm’s Katie Fehrenbacher went more in depth on Apple’s Reno Data Center than I did.

Apple makes progress on its solar-powered data center in Reno, but (of course) it’s controversial



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Apple's solar farm next to its data center in Maiden, North Carolina

Apple’s Reno data center is already underway, but not surprisingly it’s a bit controversial: Apple has a deal for an 85 percent reduction on its property taxes.

In Katie’s post she points to another article about the receiving operations that is behind schedule. On page 2 of the article is an extra 1.5% sales tax savings.

Key to the sales tax break, however, is the ability to ship the computer equipment to a storefront inside a tourism improvement district. Under Nevada law, state officials can exempt a company from all but 2 percent of its 7.5 percent sales tax obligation. But if Apple opens a receiving center within such a district, it can whittle that remaining 2 percent down to 0.5 percent.

Let’s do simple math and just assume there is $15 million of capital equipment to be put in the 2.5 MW $15 million data center.  So the tax savings is $225,000 for this phase.  Is it worth it to build a receiving building, unload the material from a truck, unpack it, and put it back on a truck, ship it to the data center, unload it again, audit the material.  Doesn’t seem like it would be.  If Apple bought $1 billion of gear the tax savings is $15 million, but Apple needs to build the receiving operations, staff it, and run an extra processing step.  The numbers don’t make sense when you get into the details.

“They need it to work for them and their bottom line, and they’re struggling to make that pencil.”


“Owning or leasing a building, staffing the building, making sure the building is secure, paying for the operating costs and paying to transfer the equipment back and forth, and you’re starting to spend some money,” Hill said.

Disclosure:  I do part time freelance work for GigaOm Research.