Approved, just hours before the provisional measure that created the scheme was set to expire, the move aims to make the country a more attractive and competitive area for data centre investment.

Despite being introduced in May and formalised in September last year, Congress had not voted on the changes, meaning the law would have been at midnight on 25 February.

​However, as a precaution in early February, the federal government withdrew the MP and submitted a new bill with identical content to the legislature.

​This is the bill now approved by the Chamber, giving investors, data centre operators and tenants confidence that the tax incentives will continue, provided the Senate also approves.

The Senate vote is expected today. Even if it is delayed, the legislative change ensures the law remains in effect.

What is ReData?

​At its core, ReData is a new package designed to lower the cost of building and expanding data centre infrastructure in Brazil, a market that has already seen a boom in investment.

​Under the scheme, companies that build, establish or expand data centres within Brazil can benefit from suspension or reduction of key federal taxes on the purchase and import of technology equipment including import duties on technology, Excise Tax (IPI)​​ and PIS and COFINS taxes.

For IPI, rates depend on the product’s tariff code, usually between 5% and 30%, but can exceed 300% for certain items.

Meanwhile, PIS and COFINS are taxes charged to Brazilian importers. For services, the rates are 1.65% (PIS) and 7.6% (COFINS). For goods, the rates are 2.1% (PIS) and 9.65% (COFINS), totalling 11.75%.

This suspension of taxes dramatically lowers the upfront capital expenditures for data centre developers, a crucial factor given that hardware and infrastructure costs traditionally make up a large portion of project budgets.

Strategic and social conditions

However, as the package is conditional, the tax benefits aren’t automatic or unconditional, with companies having to apply and qualify and meet a set of strategic requirements that tie fiscal incentives to broader economic and social goals.​

Those who benefit from the tax break must make available at least 10% of their processing, storage and data management capacity to the Brazilian domestic market.

Sustainability standards

Projects must use 100 % renewable or clean energy sources and achieve strict water‑use efficiency metrics.

Innovation investment

Companies must invest 2% of the value of incentivised equipment into research, development and innovation (R&D) in Brazil, often in partnership with universities, research institutes or public tech entities.

These conditions will ensure that Brazil not only gets data centres but maximises local value creation, sustainable energy use and advancements in technology.

As tax costs are one of the largest barriers to building data centres in high‑tax jurisdictions like Brazil, reducing these costs could unlock substantial foreign and domestic investment.

The Brazilian Chamber of Deputies recently approved the special tax regime, offering operators R$7 billion in tax exemptions over a three-year period.

Brazil’s booming industry 

Brazil stands at the centre of the region’s data centre expansion, being the most active market for cloud and AI infrastructure and accounting for about 40% of total data centre investment in LATAM.

According to Elena Winters, VP of international business at Elea Data Centers, in Brazil, proposed tax reforms could change the market significantly.

“ReData, if passed, reduces taxes and makes investment in Brazil more attractive. Without it, development will continue, but at a slower pace,” she recently told Capacity. “Growth continues, but ReData would ease entry and unlock billions of dollars in investment.”

Brazil’s Special Tax Regime for Data Centre Services is more than a tax cut, it’s an attempt to reposition the country as a digital infrastructure hub, benefiting its customers.

Capacity LATAM