The Brazilian federal government submitted to Congress a provisional measure (MP) establishing ReData, a special tax regime aimed at promoting investments in data centres across the country.
The measure, which takes immediate effect, slashes the consolidated tax burden on computing and data processing equipment from approximately 52% to between 18% and 20%.
The long-anticipated reform is being hailed by the tech industry as a game-changer, with many stakeholders predicting a surge in foreign and domestic investments in the sector.
The Brazilian Association of Data Centers (ABDC) welcomed the initiative, commenting that it would level the playing field with regional competitors like Chile.
‘Attracting new investments will have a direct impact on the national economy, generating skilled jobs, strengthening the supply chain, and expanding digital infrastructure, an essential condition for Brazil’s competitiveness in the global economy,’ commented ABDC president Renan Lima Alves.
Although provisional measures take effect upon publication, they must be approved by Congress within 60 days. Industry leaders have urged lawmakers to pass the measure swiftly.
According to the government, the tax exemptions will apply to servers and essential components such as CPUs and GPUs, exempting them from federal taxes like IPI, PIS, and Cofins until 2027.
Import taxes will be waived on equipment without a domestic equivalent. The government projects these incentives could attract up to R$2 trillion (approximately US$377 billion) in investments over the coming years.
However, these benefits come with sustainability requirements. ReData mandates that data centres receiving tax breaks must commit to using renewable energy sources, minimizing water consumption, and prioritising local data storage. Public institutions, including health services and universities, are also expected to benefit from part of the infrastructure developed under the programme.
A separate legislative proposal has also been introduced to strengthen antitrust and competition frameworks in the digital economy.
Finance Minister Fernando Haddad stressed that the initiative is also a step toward data sovereignty, noting that currently, 60% of Brazilian data is hosted abroad. ‘Bringing processing to Brazil reduces our services trade deficit and ensures legal and environmental safeguards for investors,’ Haddad said.
President Luiz Inácio Lula da Silva underlined that this is not a tax giveaway but a forward-looking reform aligned with Brazil’s broader tax overhaul.
“We’re sending a message to the world: there is no veto against any company, regardless of country of origin, if it complies with Brazilian law,” said Lula. “I hope President Trump is watching this.”
Currently the country still has a small share in the global data centre market, although it has comparative advantages in renewable energy and communications infrastructure, including submarine cables.
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