Brazil’s Senate has approved REDATA, a specialised tax regime offering five-year federal tax suspensions on qualifying data centre equipment while imposing strict sustainability, domestic capacity and R&D commitments. The bill now awaits presidential sanction.
Brazil’s Federal Senate has approved Bill No. 278/2026, establishing the Special Tax Regime for Data Centre Services (REDATA), a specialised tax incentive program designed to expand Brazil’s digital infrastructure.
The initiative seeks to reduce Brazil’s reliance on foreign digital services, bolster technological sovereignty, and improve economic competitiveness in the era of artificial intelligence. By amending existing laws, the bill offers tax suspensions on the acquisition and import of technological equipment for companies that build or modernise data centres within the country.
Approved without substantive amendments, the bill has now been sent to the President for sanction.
Eligible beneficiaries: Qualified vs. co-qualified entities
The bill introduces a two-tier participation framework managed by the Federal Revenue Secretariat.
- Qualified beneficiaries: The REDATA regime applies to legal entities investing in or expanding data centre services in Brazil, including cloud computing, high-performance computing and AI. Applicants must be tax-compliant and have no outstanding CADIN registration. Companies under the Simplified National Tax System (Simples Nacional) are excluded from the programme.
- Co-qualified suppliers: Extends tax benefits to manufacturers and suppliers who contractually supply self-manufactured ICT products for direct integration into the fixed assets of a qualified beneficiary. If this contractual link is severed, the supplier’s co-qualified status is instantly terminated.
Mechanics of tax suspension and zero-rate conversion
REDATA provides a five-year suspension of federal taxes on domestic purchases and imports of electronic components, ICT products and hardware used as fixed assets by qualified data centres. The suspension covers PIS/Pasep, Cofins and IPI, with the Import Tax (II) suspension limited to eligible electronic components and ICT products that have no domestic equivalent or are manufactured in the Manaus Free Trade Zone. Products already benefiting from Manaus Free Trade Zone incentives are excluded from the IPI suspension.
The “zero-rate” conversion route
The tax suspensions are conditional rather than immediate permanent exemptions. They convert to a permanent zero tax rate only after the required milestones are met.
Qualified entities must fulfil sustainability, energy, water and R&D commitments and add the assets to their fixed assets, while co-qualified suppliers must complete the sale and delivery of the manufactured ICT assets to the qualifying data centre.
Beneficiary commitments & compliance rigour
REDATA beneficiaries must meet domestic capacity, clean energy, water-efficiency and R&D requirements to retain tax suspensions. These include allocating 10% of capacity domestically, using 100% renewable or low-emission electricity, maintaining a WUE of up to 0.05 L/kWh, investing 2% of subsidised acquisitions in R&D, and complying with additional environmental rules.
Regional Equity Adjustments
REDATA provides regional incentives for data centres in the North, Northeast and Center-West. Eligible projects receive a 20% reduction in both the domestic capacity and R&D requirements, lowering them to 8% and 1.6%, respectively. In addition, at least 40% of REDATA-generated R&D funds nationwide must support programmes and projects located in these three regions.
Enforcement and penalties for breach
REDATA is jointly overseen by the Ministry of Finance and MDIC, with strict penalties for non-compliance. Failure to meet sustainability, water, renewable energy or R&D requirements can result in retroactive repayment of all suspended taxes, interest and penalties.
Suppliers may also become liable for unpaid taxes if they fail to deliver qualifying assets. Failure to meet the domestic capacity requirement suspends benefits on future acquisitions and can lead to permanent loss of REDATA qualification after 180 days.
Companies and their economic groups can also face a two-year reapplication ban, while unpaid liabilities may be assessed by the authorities with additional penalties.
