Brazil’s Senate Approves Redata, Tax Incentive Regime for Data Centers

Brazil’s Senate approved Redata on September 1, 2026. The bill (PL 278/2026) creates a special taxation regime for data centers in Brazil. Thus, the text replaces a provisional measure that had expired in February. The Chamber of Deputies had already approved the proposal earlier. Therefore, the bill now heads to presidential sanction.

How the Redata Incentive Regime Works

In practice, Redata zeroes out federal taxes on imports of electronic components and IT equipment. These items must be intended for installing data centers in the country. In exchange, benefiting companies take on several obligations. They must also use clean or renewable energy sources to operate their facilities. In addition, they must maintain water efficiency of at most 0.05 liters per kWh in cooling systems. Companies must also invest 2% of the value of acquired goods in local content. Finally, they must reserve 10% of service capacity for the Brazilian domestic market.

Fiscal Impact and Criticism of the Bill

According to government estimates, this year’s tax revenue loss totals around R$5.2 billion. That figure should fall to roughly R$1 billion per year over the following two fiscal years. The administration expects the new regulatory framework to attract billions in technology-sector investment. This expectation grows amid rising demand for data-processing infrastructure to support artificial intelligence.

For the government, Redata represents a key piece of deregulation. The measure aims to enable large-scale data processing within the country. It should also boost the development of artificial intelligence models locally. However, civil society organizations and digital policy experts criticize how the bill moved through Congress. They argue the debate on the issue was insufficient. Moreover, they point to a lack of effective digital sovereignty guarantees for Brazil. As one critical statement summarized it, “sovereignty is not just about installing servers on national territory.” The full text of the bill is available on the website of Brazil’s Federal Senate. For more news on Congress, check OnTheNet’s Politics section.