Brazil implements Redata tax regime for data centers

Brazil has implemented a new special tax regime for data center services, known as Redata, following the publication of Law No. 15.504/2026. The regime provides tax incentives for companies that install, modernize, or expand data centers within the country.

To access these benefits, companies must meet specific requirements, including dedicating at least 10% of their effective processing, storage, and data treatment capacity to the Brazilian market. Other obligations involve research and development, the use of renewable or low-emission energy, water efficiency, and sustainable cooling technologies.

The incentives include the suspension of taxes on the acquisition or import of electronic components and information technology products intended for fixed assets. Affected taxes include PIS/Pasep, Cofins, and IPI, with potential suspension of Import Tax for products without local equivalents. While fiscal benefits are planned for a five-year period, PIS/Pasep, Cofins, and IPI benefits are set to take effect until December 31, 2026, in accordance with consumption tax reform rules.

The measure aims to modernize the fiscal burden on digital infrastructure, reduce entry barriers, and increase Brazil's competitiveness in attracting international technology investments and supporting the growing demand for artificial intelligence.