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Brazil Approves R$7 Billion Tax Breaks to Lure Global Data Centre Investments

Brazil's Chamber of Deputies has passed a bill creating a special tax regime to attract data centre investments, projecting R$ 7 billion in tax waivers over three years. The regime suspends federal taxes on equipment to lower costs for companies installing or expanding data centres in the country. To qualify, companies must use 100% renewable energy, meet water efficiency standards, and invest in R&D, particularly in less-developed regions. The proposal now moves to the Federal Senate for a crucial vote before the provisional measure expires.

Key Points: Brazil's R$7B Tax Regime for Data Centres Approved

  • R$7B tax waiver over three years
  • Exemptions on ICT equipment imports
  • Mandates 100% renewable energy use
  • Ties benefits to R&D and regional investment
2 min read

Brazilian Chamber approves special tax regime for Data Centres, projects R$ 7 Billion in waivers over three years

Brazil's Chamber approves a special tax regime for data centres, offering R$7 billion in waivers to attract digital infrastructure investment with green energy mandates.

"Brazil must act swiftly to secure its position in what he described as a global race for critical infrastructure. - Aguinaldo Ribeiro"

Brasilia, February 25

Brazil's Chamber of Deputies approved, in the early hours of Wednesday, a bill creating the Special Tax Regime for Data Centre Services, a measure designed to attract large-scale digital infrastructure investments with an estimated tax waiver of R$ 7 billion over three years. The proposal now moves to the Federal Senate, which must vote on it before midnight when the provisional measure underpinning the policy expires.

The regime aims to encourage companies to install or expand data centres in Brazil by suspending federal taxes on the acquisition and import of equipment destined for fixed assets. The benefits include exemptions from PIS/Pasep, Cofins and IPI taxes for Information and Communication Technology (ICT) equipment, significantly lowering implementation costs amid intense global competition for data infrastructure, as reported by Brasil 247.

Rapporteur Aguinaldo Ribeiro argued that Brazil must act swiftly to secure its position in what he described as a global race for critical infrastructure. He emphasised the country's comparative advantages, particularly in renewable energy capacity and a highly connected population.

Access to the incentives, however, will be conditional. Companies must allocate part of their installed capacity to the domestic market, use 100% renewable energy, meet strict water efficiency standards and invest a minimum percentage in research, development and innovation. A mandatory share of R&D funding must be directed toward Brazil's North, Northeast and Central-West regions, aligning the initiative with goals of digital sovereignty, sustainability and regional development.

The estimated fiscal impact stands at R$ 5.2 billion in 2026, R$ 1 billion in 2027 and R$ 1.05 billion in 2028, with declining revenue losses linked to the country's ongoing tax reform transition.

If approved by the Senate within the deadline, Redata could become a cornerstone of Brazil's industrial strategy for digital and artificial intelligence infrastructure, reinforcing its ambition to compete globally in the data-driven economy.

- ANI

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Reader Comments

P
Priya S
R$ 7 billion in tax waivers is a huge commitment. While attracting investment is good, I hope they have a solid plan to monitor compliance with the conditions, especially the R&D funding for specific regions. Sometimes these benefits don't trickle down as intended.
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Vikram M
Linking tax benefits to sustainability (renewable energy, water efficiency) is the right way to do it. It's not just a freebie; it's an investment in green infrastructure. More countries need to adopt this model. Kudos to Brazil for showing the way.
R
Rohit P
The "digital sovereignty" angle is key. Every nation needs to secure its data infrastructure. With our Digital India push, we are on a similar path, but maybe we need to be even more aggressive with tax breaks to compete for global companies looking for a base in Asia.
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Sarah B
Interesting policy. The conditional access is smart—ensuring companies contribute to the local market and R&D. The estimated fiscal impact seems high initially, but if it brings long-term tech jobs and positions Brazil as a leader, it could be worth it.
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Karthik V
As someone in the IT sector, this is exactly the kind of policy that creates a thriving tech ecosystem. Lowering the cost of setting up data centres is a major draw. Hope our state governments in India, like in Maharashtra or Karnataka, are watching and learning.

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