Brazil's Senate approves Redata tax break for AI data centers

Brazil's Federal Senate approved Bill 278/2026 on Tuesday, creating the Special Taxation Regime for Data Center Services — Redata. The text had already passed the Chamber of Deputies in February and replaces a provisional measure that created the regime but expired before being turned into law. With Congress done processing it, the bill now goes to presidential sanction.

Redata waives federal taxes — Import Tax, PIS/Cofins, PIS/Cofins-Import and the Tax on Industrialized Products — on electronic and IT components bought to install or expand data centers in the country. According to the bill's rapporteur, senator Cid Gomes, the regime "aims, fundamentally, to reduce the tax burden on the physical infrastructure needed for data processing, cloud storage, and the training and inference of artificial intelligence models."

The trade-offs: clean energy and R&D reinvestment

The tax break is not unconditional. Beneficiary companies will have to meet all of their data centers' electricity demand with renewable or low-carbon sources — an amendment passed in the Senate that replaced the original wording, "clean or renewable sources." They will also have to keep a Water Efficiency Index for equipment cooling at or below 0.05 liters per kWh, measured annually, and reinvest 2% of the value of products bought under the tax benefit into Research and Development at universities and Science and Technology Institutes.

The bill also reserves 10% of the services provided by beneficiary data centers for the domestic Brazilian market. To encourage geographic decentralization of a sector currently concentrated in the Southeast, Redata cuts by 20% the offsetting requirements for companies that install their data centers in the North, Northeast and Center-West regions — and requires that at least 40% of the R&D funds generated by the regime in those regions be spent there.

• Estimated fiscal impact: R$5.2 billion in tax exemptions in 2026, R$1 billion in 2027 and R$1.05 billion in 2028.
• Energy trade-off: 100% of beneficiary data centers' electricity from renewable or low-carbon sources.
• Water trade-off: a Water Efficiency Index at or below 0.05 liters per kWh for cooling.
• Reinvestment: 2% of the value of products imported under the tax benefit spent on R&D.
• Domestic market: 10% of data center services reserved for Brazil.

Approved over the Chamber's objection

The Senate floor vote was not without friction behind the scenes. During the process, members of the Chamber of Deputies' Board contested the nature of the rapporteur's changes, arguing that one of them — swapping "clean or renewable sources" for "renewable or low-emission sources" — amounted to a substantive change rather than a wording fix, which would have sent the bill back to the Chamber. Cid Gomes denied the change altered the bill's substance, and the measure was approved by a symbolic vote, heading straight to presidential sanction, with deputies informed afterward.

Of the 39 amendments filed in the Senate, the rapporteur accepted only four, fully or in part. One swaps the phrase "with no domestic equivalent" for "with no equivalent domestic production capacity" as the criterion for Import Tax exemption — a change that, per the report, aligns the text with parameters already used by Camex's executive management committee.

"Sovereignty isn't just about installing servers," critics say

Sovereignty isn't just about installing servers on national territory. It involves national technological and scientific capabilities, data security and governance, energy autonomy, and the protection of natural resources.

Critics argue the bill wasn't debated enough to guarantee real gains in digital sovereignty, and note that data centers — used mainly by large platforms to train AI models and store cloud data — are already criticized for heavy energy and water consumption, in a country competing with other markets for Big Tech's billion-dollar AI infrastructure investments.

For a foreign server or GPU maker eyeing the Brazilian market, or an international cloud provider weighing where to build its next AI data center, Redata directly lowers the cost of importing the hardware needed to operate in the country — provided it can meet the new environmental conditions. For renewable-energy and water-efficiency vendors, the new regime creates a mandatory offset market that didn't exist before.