Aims to attract investment and ensure cheap service in the country
Brazil plans to introduce new incentives to attract data center operators to the country.
This month, President Luiz Inácio Lula da Silva signed the Provisional Measure establishing the Special Taxation Regime for Datacenter Services in Brazil, known as ReData. The PM now heads to congress.
The measure was signed during an official ceremony that also enacted a law aimed at protecting children and adolescents on digital platforms, known as the Digital ECA or the adultization law.
The initiative is part of the National Data Center Policy (PNDC), linked to the New Industry Brazil (NIB) program, within Mission 4 - Digital Transformation. The aim is to foster the development of strategic sectors of Industry 4.0, such as cloud computing, artificial intelligence, smart factories, and the Internet of Things, by expanding the national infrastructure for data storage, processing, and management.
According to finance minister Fernando Haddad, the new tax regime aims to attract investment and promote the provision of lower-cost services in the country.
It aims to increase Brazil's competitiveness in the digital infrastructure sector by reducing operating costs, which are currently considered high in international comparison.
The Provisional Measure establishes that the tax incentives will be conditional on investments in research and development, with a focus on expanding digital production chains in the country. It also determines that a minimum portion of the services should be destined for the domestic market.
In addition, the proposal provides incentives for the geographical decentralization of investments, with differentiated conditions for ventures in the North, Northeast, and Midwest regions.
Tax incentives provided by the Provisional Measure include exemptions on the purchase of ICT equipment. It reduces the consolidated tax burden on computing and data processing equipment from around 52 percent to approximately 18-20 percent.
Currently, around 40 percent of the data generated in Brazil is processed within the country, according to a 2024 report by the United Nations Conference on Trade and Development (UNCTAD).
The rest is sent to servers located abroad, where Brazilian legislation does not apply.
The proposals seek to expand data processing in the country, with the aim of reducing the outflow of financial resources abroad and strengthening the country's national digital infrastructure. The Ministry of Finance considers the project to be strategic for Brazil's technological sovereignty.
In the 2026 Annual Budget Bill (PLOA), 5.2 billion reais ($981m) have been set aside for the ReData program. From 2027 onwards, the program will also benefit from the changes planned in the Tax Reform.
According to estimates by the Ministry of Finance, the incentives associated with ReData have the potential to attract up to 2 trillion reais ($337.4bn) in private investment over the next decade. The incentives established by the program will last for up to five years, in accordance with the tax transition regime provided for in the Tax Reform.
The vice president and minister of development, industry, trade, and services (MDIC), Geraldo Alckmin, stressed that the implementation of the program represents a significant step forward in the process of digital transformation of Brazilian industry, as envisaged in Mission 4 of the New Industry Brazil (NIB).
According to him, the initiative has the potential to stimulate investments in sectors considered strategic, such as the production of semiconductors, software, fiber optic networks, and industrial equipment. The program also contributes to strengthening the digital economy and generating skilled jobs along the related production chains.
Victor Arnaud, president of Equinix in Brazil, pointed out that the formalization of the ReData program represents a significant step forward in positioning the country as a technological center with global reach.
The Provisional Measure was drawn up by the Civil House, with the collaboration of the Ministry of Development, Industry, Trade and Services (MDIC), as well as the ministries of Finance (MF), Science, Technology and Innovation (MCTI), Environment and Climate Change (MMA), Mines and Energy (MME), Communications (MCom) and Management and Innovation in Public Services (MGI), as well as the National Bank for Economic and Social Development (BNDES).
Local operator Ascenty has previously stated that the initiative has the potential to boost investment in Brazil. Atlantic Data Centers - the new firm from Um Telecom - also called the measures important.
Source: DCD
