Brazil's President Lula signed the ReData data center bill into law after Senate passage, establishing regulatory frameworks for facility operations.
On Tuesday, September 15, President Luiz Inácio Lula da Silva (PT) signed Bill 278/2026 into law during a ceremony at the Planalto Palace, establishing the Special Taxation Regime for Data Center Services (ReData). The legislation creates tax incentives for data processing centers across Brazil, with a particular focus on facilities dedicated to cloud computing and artificial intelligence.
The bill advanced through Congress without substantive changes. After passing the Chamber of Deputies in February under urgent procedure—bypassing committee review—it was approved by the Senate on September 1. Senate rapporteur Senator Cid Gomes (PSB) reportedly made only editorial adjustments to prevent the measure from returning to the Chamber.
Under ReData, participating companies receive suspensions on import duties, the IPI tax, the PIS/Pasep taxes, and the COFINS tax—including those levied on imports—for information and communication technology equipment and components purchased domestically or abroad for data center use. These benefits apply for up to five years, converting to permanent exemptions once all program obligations are met. The import duty suspension applies exclusively to products lacking a Brazilian manufacturing equivalent. Additionally, the Manaus Free Trade Zone retains its specific regulatory treatment, meaning the IPI suspension does not extend to certain items produced within the region.
Government projections estimate the tax waivers will total approximately 5.2 billion reais ($1 billion) in 2026, followed by 1 billion reais ($193.7 million) annually for the next two years. According to the Ministry of Finance, roughly 60 percent of Brazil’s data and artificial intelligence workloads are currently processed overseas, a trend partially driven by existing tax burdens.
To qualify for ReData, companies must meet several operational and investment requirements. They must allocate at least 10 percent of their data processing, storage, and handling capacity to the domestic market, with no allowance for exporting or retaining that portion. Firms must also adhere to sustainability standards, including sourcing electricity from renewable or low-emission grids, maintain a Water Efficiency Index of no more than 0.05 liters per kilowatt-hour, and invest an amount equal to 2 percent of the value of products acquired under the program back into the Brazilian economy. Companies operating in the North, Northeast, Midwest, or regions covered by local development agencies benefit from reduced thresholds: 8 percent for domestic allocation and 1.6 percent for reinvestment. Furthermore, at least 40 percent of investments aimed at stimulating the digital economy must be directed to these designated regions.
Noncompliance carries strict consequences. Failure to meet obligations triggers the collection of suspended taxes, plus applicable interest and penalties. Specifically, missing the domestic market supply target results in a suspension of benefits for future purchases, with full eligibility revoked if the shortfall is not remedied within 180 days. Enrollment requires prior authorization from the Ministry of Finance, which will share oversight responsibilities with the Ministry of Development, Industry, Trade, and Services.
This piece was translated from DCD's Portuguese site and edited by a member of DCD staff.