Brazil Senate approves data center tax breaks worth billions, sends bill to Lula

Brazil’s Senate approved Redata, a Special Tax Regime for Datacenter Services, to suspend or exempt federal taxes on equipment for data centers, with an estimated tax impact of 5.2 billion reais in 2026. The bill, passed with minimal changes from the Chamber and headed to President Lula da Silva for signature, formalizes incentives that originated as provisional measures. Changes include clarifying import tax eligibility and broadening eligible energy sources to low-emission rather than just clean energy. The regime applies to data centers expanding or installing operations in Brazil, requires minimum local market reservation of processing and storage capacity (10%, 8% in certain regions), and mandates use of renewable or low-emission electricity and funding for research and development. The package aims to attract domestic and international firms, spur digital infrastructure, and boost job creation and technological innovation across the country. These measures follow earlier attempts to enact similar incentives and underscore Brazil’s effort to position itself as a regional hub for data services.