Lula Signs Redata, a Tax-Incentive Regime to Attract Data Centers to Brazil

Overview

• The provisional measure grants exemptions from IPI, PIS/Pasep and Cofins on data-center equipment and, when there is no equivalent local production, waives import duties, with exports of services also relieved.
• The government estimates a short-term fiscal cost of roughly R$7.3–R$7.5 billion over three years, including R$5.2 billion in 2026, and projects up to R$2 trillion in private investment over the next decade.
• To qualify, companies must invest 2% of acquisitions in research and development and reserve at least 10% of capacity for Brazil’s market, with reduced thresholds of 1.6% and 8% for projects in the North, Northeast and Center-West.
• Benefiting projects must use renewable or clean energy and adopt near-zero water-use standards, with incentives designed to spread infrastructure beyond the current concentration in São Paulo.
• The government frames Redata as advancing digital sovereignty, noting about 60% of Brazilian data is processed abroad, and the measure takes immediate effect pending congressional approval within 120 days.