The Plenary of the Federal Senate approved, on September 1, 2026, Bill No. 278/2026, which establishes the Special Tax Regime for Data Center Services (“REDATA”). The bill now proceeds to presidential approval.
The approval of REDATA demonstrates a legislative focus on the development of Brazil’s digital economy. Through amendments to Law No. 11,196/2005 (the “Lei do Bem”), legal and fiscal continuity was provided to a sector previously supported by Provisional Measure No. 1,318/2025, which had expired. In light of the imminent lapse of the Provisional Measure, the introduction of Bill No. 278/2026 allowed for a more robust parliamentary debate. The bill was approved by the Chamber of Deputies in February of this year and fast-tracked through the Senate under an urgency procedure.
REDATA’s primary purpose is to reduce the tax burden on the physical infrastructure required for data processing, cloud storage, and the training and inference of artificial intelligence models. The regime seeks to lower the so-called “Brazil cost” for the installation of industrial-scale data centers, positioning the country as a regional technology hub and addressing digital sovereignty concerns — currently, approximately 60% of the data and artificial intelligence used in Brazil are processed on infrastructure located abroad.
Data centers engaged in the storage, processing, and management of data and digital applications may adhere to the regime, including cloud computing infrastructure, high-performance computing, and the training and inference of artificial intelligence models. Company qualification will require authorization from the Ministry of Finance, upon demonstration of a project for the installation or expansion of data center services within national territory.
Among the key aspects of REDATA, the following stand out:
Tax Incentives
REDATA provides for the suspension of the following federal taxes levied on the acquisition of electronic components and other information and communication technology (ICT) products allocated to the fixed assets of qualified data centers:
- Import Tax (II) — applicable only to electronic components and ICT products without equivalent domestic production, provided they are listed in an act of the federal Executive Branch;
- PIS/Pasep and Cofins Contributions;
- Tax on Industrialized Products (IPI) — does not apply to electronic components and other ICT products manufactured in the Manaus Free Trade Zone, as listed in an act of the federal Executive Branch.
The conversion of the suspension into a zero rate will occur upon fulfillment of the requirements set forth in the bill, including the incorporation of the asset into the qualified company’s fixed assets. The regime will be in effect for five years from its implementation.
An application for qualification under REDATA will not prevent participation in REPES (the Special Tax Regime for the Information Technology Services Export Platform) until the date of approval under said regime.
The bill also introduces a “co-qualification” mechanism, which extends the tax benefit to domestic suppliers of ICT products incorporated into the data center’s fixed assets. This mechanism provides a direct incentive for Brazil’s electronics industry to develop the capacity to supply this new market.
Requirements and Sustainability Commitments
REDATA establishes verifiable commitments that condition the enjoyment of tax benefits. These requirements are structured around four main pillars:
- Renewable or Low-Emission Energy: beneficiary companies must meet 100% of their electricity demand through supply contracts or self-generation from renewable or low-emission sources. The version approved by the Senate replaced the original term “clean or renewable sources” with “renewable or low-emission sources,” adopting an amendment that allows the inclusion of natural gas among the sources eligible to meet the regime’s requirements, subject to regulation.
- Water Efficiency: the bill establishes a Water Usage Effectiveness (WUE) index of no more than 0.05 liters of water per kWh, measured annually, for equipment cooling systems. Companies must publish an annual sustainability report disclosing the efficiency index, the sources of electricity used, and other indicators.
- R&D Investments: beneficiary companies are required to allocate 2% of the value of products acquired under REDATA’s benefits to Research and Development investments.
- Domestic Market Supply: companies must direct at least 10% of the effective supply of data processing, storage, and handling services installed to the Brazilian market. This portion may not be allocated to exports or internal use.
Regional Incentives
REDATA establishes a mechanism to encourage regional development, providing a 20% relaxation of requirements for companies that establish operations in the North, Northeast, and Central-West regions or in areas served by regional development agencies. In such cases, the portion allocated to the Brazilian market may be reduced from 10% to 8%, and the R&D investment obligation may be reduced from 2% to 1.6%.
Additionally, the text requires that at least 40% of all R&D funds generated by REDATA be invested in these same regions, ensuring that technological knowledge extends beyond the major traditional urban centers.
Our Digital Infrastructure, Energy, Oil & Gas, and Tax teams remain available to answer questions and assist in analyzing the impacts and opportunities arising from REDATA.