President Luiz Inácio Lula da Silva signed into law on Tuesday (15) the two bills that create Brazil's new tax incentive program for data centers, the Redata, at a ceremony in the Planalto Palace. According to Tele.Síntese, the regime was created by bill PL 278/2026 and given fiscal footing by complementary bill PLP 74/2026, both approved by Congress in early September. In practice, the program cuts federal taxes for companies that build or expand data centers in the country.
The new law suspends and later zeroes the rates of the IPI federal excise tax, PIS/Pasep and Cofins contributions on the purchase and import of information and communication technology equipment, SBT News reports. The import tax also drops when there is no equivalent domestic production. The benefits run for five years. The government estimates a 5.2 billion reais tax waiver in 2026 alone, according to news site g1. The money is already earmarked in this year's budget, but the delay in Congress had left the benefit in a budgetary and legal limbo, as Folha de S.Paulo reported. The Redata had first been created by a provisional measure in September 2025 and expired in February without a vote.
Veto removes rider on budget amendments
Alongside the signature, Lula vetoed a provision dealing with municipalities and the Fiscal Responsibility Law, or LRF, the Brazilian rulebook for public accounts. The provision was a rider, known in Brazil as a jabuti, a clause unrelated to the bill's main subject, and it did not affect the structure of the Redata. SBT News reports the government judged the loosening of fiscal requirements a step backward. Lula did not speak at the event. The rider had been added in the Chamber of Deputies by rapporteur Isnaldo Bulhões of the MDB party. It opens a loophole in the LRF allowing congressional budget amendments to reach cities with fewer than 65,000 residents, including those in debt with the federal government or lacking transparent accounts. According to the National Confederation of Municipalities, cited by g1, the change affects more than 5,000 cities, about 90% of Brazil's 5,569 municipalities.
"Those municipalities that are the smallest in the country, in every corner, from South to North, from North to Northeast, deserve special treatment, because they increasingly want to improve and seek technical capacity to meet this type of requirement, which sometimes, over simple compliance problems, leaves them unable to receive some funds" (Isnaldo Bulhões, on the Chamber floor).
The bill carrying the rider passed by a wide margin, with 364 votes in favor, 46 against and three abstentions. The idea is not new. Congress had already inserted a similar exception in the 2026 budget guidelines law; Lula vetoed that text and lawmakers overturned the veto, as g1 notes. Deputy Gilson Marques of the Novo party criticized the change for removing the fiscal responsibility requirement.
Requirements and next steps
In exchange for the tax breaks, companies face conditions. They must reserve at least 10% of the processing, storage and data handling capacity built with the incentive for the Brazilian market, and invest 2% of the value of the goods purchased under the program in research, development and innovation, with part of the funds going to the North, Northeast and Center-West regions. They must also secure renewable or low-carbon energy and meet a water efficiency standard of up to 0.05 liters per kWh. Companies under the Simples Nacional small-business tax regime are excluded, and the Federal Revenue Service will handle eligibility, SBT News reports. "The Redata deals with the fundamental base of this digital economy. Digital infrastructure is what we need to make everything work", said Affonso Nina, executive president of tech association Brasscom. According to the presidential palace, about 60% of Brazilians' data are stored abroad.
Vice President Geraldo Alckmin, cited by Tele.Síntese, said a 100-megawatt project can require at least 1 billion reais in construction and between 4 billion and 5 billion reais in equipment. A representative of the Finance Ministry said at the ceremony: "This project makes it possible for the supply of these services from Brazil to become competitive". What comes next: the program still depends on a presidential decree, in its final stage of drafting, and on an interministerial ordinance with the technical criteria. Congress, in turn, will decide whether to uphold or overturn Lula's veto of the rider.