The cloud-computing division of Amazon.com Inc. is planning to build a regional data centre in a free-trade area of Argentina, according to people familiar with the matter.
The Seattle-based company is preparing to invest about US$800 million in the 10-year project. The firm will score considerable tax benefits by locating the data centre in the partidos of Bahía Blanca and Colonel Rosales in Buenos Aires Province, said sources who asked not to be identified because they are not authorised to speak in publicly about the deal.
Amazon's decision to place part of its crucial cloud-computing infrastructure in the second-largest economy in South America is a great victory for the Argentine government, which wants to diversify its economy into areas such as digital services, nanotechnology, aerospace and others.
Earlier this year, Congress unanimously passed the Knowledge Economy Law (Ley de Economía del Conocimiento), which creates incentives for technology companies to do business in Argentina, an important achievement given the country is in the middle of an election year that has polarised society.
Amazon, like any company set to benefit from the new law, will receive export tax exemptions, a reduction in the income tax rate from 35 percent to 15 percent and will effectively pay lower labour costs. In addition, when located in the free-trade zone, Amazon will not pay national or provincial taxes on energy consumption, a generous benefit for a data centre.
Through a spokesperson, the company declined to comment. The project in Argentina is unfinished and could still see changes, said one of the people involved in the deal.
Amazon Web Services (AWS), the company's most profitable business arm, has been expanding its infrastructure around the world to maintain an edge over rivals such as Microsoft Corp and Alphabet Inc. Sales of cloud computing services and software are expected to add up a total of US$ 214.3 billion in 2019, an increase of 17.5 percent on the previous year, according to the Gartner research firm.
Having an Amazon data centre nearby helps companies reduce costs and improve data speed, instead of relaying on sites outside the country. Argentina hosts several online teams, including its largest company, the giant e-commerce retailer MercadoLibre Inc., which uses AWS to host its platforms.