60% of Brazilians' data, from family photos to bank statements, is currently stored outside the country, according to figures presented by the government. To try to change that, President Luiz Inácio Lula da Silva signed into law on Tuesday (15) the Redata, a Special Taxation Regime for Data Center Services. In practice, companies that build or expand data centers in Brazil will pay less tax on the equipment they buy.
The break runs for five years, until 2031. In exchange, every company that joins must reserve at least 10% of the processing and storage capacity installed under the benefit for the Brazilian market: one in every ten units of capacity has to serve local customers. Companies must also invest 2% of the value of equipment bought with the discount in research and innovation, the equivalent of R$ 2 for every R$ 100 spent.
Explainer: a data center is a complex of servers, the computers that store and process large volumes of information. It is the physical home of the internet and of artificial intelligence: what we call the "cloud" actually sits in buildings like these, which run 24 hours a day and need constant cooling.
The money involved is huge. Vice President Geraldo Alckmin said at the signing ceremony that a 100-megawatt project requires at least R$ 1 billion in construction and between R$ 4 billion and R$ 5 billion in equipment, according to TeleSíntese. The equipment bill alone is more than 40 times the estimated R$ 95 million jackpot of the Mega-Sena lottery drawn that same Tuesday.
Which taxes fall
The regime suspends PIS/Cofins (federal levies on revenue and imports) and the IPI industrial products tax on purchases of electronic components, G1 and TeleSíntese report. When there is no equivalent domestic production, the import tax can be cut to zero. The law also creates tax benefits for exports of services by the sector.
The text is bill PL 278/2026, introduced this year by then lawmaker José Guimarães (PT-CE), now a minister, and approved by the Senate on September 1, G1 reports. It replaces a provisional decree issued in September 2025 that lapsed in February without a vote in Congress. Fiscal backing for the program came from PLP 74/2026, a complementary bill approved this month, according to TeleSíntese.
Gas and water at the center of the debate
The signing does not end the dispute, because the details still depend on a presidential decree and a ministerial order. The most sensitive point is what counts as low-carbon energy: G1 reports that the government has yet to decide whether natural gas makes the list. Brazil Journal reported that the renewables lobby is working to keep gas out, while an Agência eixos piece argues the government cannot "close the door" opened by Congress.
Environmental groups criticize the high water consumption of these facilities, G1 reports. The law requires reports on the Water Usage Effectiveness indicator (WUE), capped at 0.05 liter of water per kilowatt-hour, roughly one glass for every 4 kilowatt-hours used. "Redata deals with the fundamental base of this digital economy," said Affonso Nina, executive president of Brasscom, a technology sector association, at the ceremony.
On the regulation, Ceron, executive secretary of the Finance Ministry, told G1: "it is natural that regulation comes afterwards... we do not have a closed position on compensation yet, we are discussing it". The program also channels resources to industrial and technological development in Brazil's North, Northeast and Central West regions.