IBM Pulls out of Data Center Project Skip to content

IBM Pulls out of Data Center Project

Companies which had planned to take part in a huge data center being set up by Verne Holding in the former army base of Keflavík International Airport are pulling out of the project. Among the international companies which are postponing their operations here is the computer giant IBM.

Yesterday, Ragnheidur Elín Árnadóttir, MP of the Independence Party, said at Althingi Parliament that the reasons were that the Ministry of Finance had not been able to decide whether to drop VAT on computer servers foreign companies would bring to Iceland to be stored in the data center.

Árnadóttir expressed concerns that the project of Verne Holding would possibly be halted because of this. She said that the government did not seem to be “in the job creating business but rather in the job erasing business.” Her constituency, Sudurnes, is one of the worst hit by unemployment.

Another MP, Skúli Helgason of the the Social Democratic Alliance and chairman of Althingi’s committee for industry, said that the criticism was legitimate. He said that computer servers were excluded from VAT in the EU and that this matter would have to be solved quickly. Both MP’s called for a quick solution on the matter on behalf of the Ministry of Finance.

Helgason explained that when computer equipment such as servers and cooling equipment are moved between countries within the EU they are regarded under the clause of free flow of products and thus exempt from VAT. When the same equipment is moved to Iceland the government taxes it with full VAT which is not refundable because the company is not operating on a permanent basis in the country.

The newly formed Association of Icelandic Data Centers has declared that this matter needs to be solved if the industry is going to be established in Iceland.

Iceland is believed to be an excellent location for data centers because of the cool climate and well educated technicians.

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