Brazil's Congress approved on Thursday (Sept 3) the bill PLC 74/2026, which unlocks funding for Redata, a federal tax incentive program meant to attract data centers to the country. The Chamber of Deputies and the Senate passed the text on the same day. The Chamber vote was 364 in favor, 46 against and three abstentions, according to news outlet G1. The bill now goes to President Luiz Inácio Lula da Silva for his signature.
Buried in the text is a provision inserted by the rapporteur, Deputy Isnaldo Bulhões (MDB-AL), which G1 described as a "jabuti," Brazilian congressional jargon for a rider unrelated to a bill's main subject. It waives two requirements of Brazil's Fiscal Responsibility Law for municipalities with up to 65,000 residents to receive congressional budget earmarks, known as emendas: being current on debts owed to the federal government and accounting for federal funds received in previous years. According to the National Confederation of Municipalities (CNM), the rule covers more than five thousand cities, about 90% of Brazil's 5,569 municipalities.
"The smallest municipalities in the country, in every corner, from South to North, from North to Northeast, deserve special treatment, because they increasingly want to improve and gain the technical capacity to meet this kind of requirement, which sometimes, over simple matters, leaves them unable to receive some funds because of a lapse in compliance," Bulhões said on the floor.
Deputy Gilson Marques (Novo-SC) criticized the change. In his view, the provision strips the law of its fiscal responsibility requirement, G1 reported. Congress has pushed this before: the 2026 budget guidelines law already contained the waiver for small cities. Lula vetoed that provision, and lawmakers overrode the veto.
What Redata is
Redata, the Special Taxation Regime for Data Center Services, was approved by Congress on Tuesday (Sept 1), according to news site Poder360. The 2026 budget sets aside R$ 5.2 billion in waived federal taxes for the program. Thursday's bill adds Redata to the list of exceptions to the fiscal rules of supplementary law 229/2026. Without that exception, the program's enactment would have been at risk, Poder360 reported. G1 said the text exempts the regime from the cap of 2% of GDP on tax benefits.
The bill was introduced by former deputy José Guimarães (PT-CE), now Lula's minister of institutional relations. The rapporteur added other measures to the package, among them a federal support program for people with cancer and disabilities and an exemption from IRPJ and CSLL, two taxes on corporate income, for reinsurers headquartered in Brazil, Poder360 reported. The next step is at the Planalto palace: Lula can sign the bill into law in full, veto parts of it or reject it entirely.