Brazil's REDATA Law Suspends Select Data Center Equipment Taxes

Brazil’s Law 15,504 creates REDATA, a tax regime suspending specified taxes on information and communications technology equipment used as fixed assets at qualifying data centers. The covered projects include services for cloud computing, high-performance computing, and AI training and inference.

President Luiz Inácio Lula da Silva signed the law on Sept. 15. It covers projects to install, modernize or expand data-center services in Brazil. The law sets a five-year term for its incentives, but gives PIS/Pasep, Cofins and the industrial-products tax, known as IPI, a shorter window.

The suspensions apply to specified taxes on eligible equipment purchased in Brazil or imported for a data center’s fixed assets. Import-duty relief is separate and limited to eligible equipment without a domestic equivalent. The law leaves the eligible-product list and other implementation details to federal regulation.

Companies must make at least 10% of covered data-processing, storage and treatment capacity available to Brazil’s domestic market. They also must meet sustainability requirements, cover electricity demand with renewable or low-emission sources, and meet an annual water-efficiency limit of 0.05 liter per kilowatt-hour. Companies must invest 2% of covered equipment value in Brazilian research, development and innovation. The law lets a company replace the domestic-service commitment with an additional investment of 10% of covered equipment value in research and development.

Google Cloud said Sept. 24 it expects to double its technical infrastructure in Brazil by 2030. Microsoft announced about $2.6 billion in cloud and AI infrastructure investment over three years in 2024, while Amazon Web Services said it would invest about $1.8 billion through 2034 to expand data centers in Brazil. Google Cloud, Microsoft and AWS have not said their announced Brazilian investments involve moving data-center capacity from the United States.

U.S. data-center construction has also faced public opposition, a subject in earlier coverage of public opposition to data-center construction.

Carlos Barrera, CEO of Atlas Renewable Energy, described Latin America as an attractive outlet for U.S. capacity constraints: “We do see the region as actually an attractive release valve for some of the U.S. capacity constraints that you see now.”

The PIS/Pasep, Cofins and IPI suspensions run only through Dec. 31, 2026.