Law establishing special tax regime for data centers is enacted by the President of Brazil
On September 15, 2026, the President of Brazil enacted Law No. 15,504/2026, resulting from Bill No. 278/2026, establishing the Special Tax Regime for Data Center Services (Redata) through amendments to Law No. 11,196 of November 21, 2005.
The new regime is intended to foster the installation, modernization and expansion of data centers in Brazil through the suspension of taxes levied on certain information and communication technology (ICT) equipment. Access to the incentives will depend on enrollment with the Brazilian Federal Revenue Service and compliance with the commitments established by Law.
Several matters required for Redata's implementation will depend on regulations issued by the Executive Branch, including eligible goods and services, enrollment procedures and the scope of the concept of low-emission sources.
Repes and Redata
Law No. 11,196/2005 already provides for the Special Tax Regime for the Information Technology Services Export Platform (Repes), aimed at legal entities predominantly engaged in software development or information technology services that undertake a minimum export commitment, subject to the applicable legal requirements.
Redata is a specific regime for projects involving the installation, modernization or expansion of data center services in Brazil. Although data center services are excluded from the material scope of Repes, an application for enrollment in Redata does not prevent access to Repes until the application under the new regime is approved. This rule allows a transition between the regimes without immediately interrupting access to Repes while the Redata enrollment application is under review.
Who may participate in Redata?
Legal entities that implement projects to install, modernize or expand data center services in Brazil and meet the conditions established by Law will be eligible to enroll in Redata. In addition to the project owner's enrollment, the regime provides for the co-enrollment of certain suppliers in the ICT value chain.
· Enrolled entity: a legal entity responsible for implementing the data center project in Brazil and meeting the legal requirements for access to the incentives.
· Co-enrolled entity: a legal entity contracted to supply ICT products manufactured by it, either at its own initiative or on a made-to-order basis, for incorporation into the fixed assets of an enrolled beneficiary. Co-enrollment will allow these suppliers to make acquisitions and imports under tax suspension, within the limits of the regime.
Termination of the contractual relationship between the co-enrolled entity and the enrolled beneficiary will terminate the co-enrollment. Enrollment and co-enrollment will be granted by the Brazilian Federal Revenue Service.
Covered services
For Redata purposes, data center services are those provided through infrastructure and computing resources dedicated to storing, processing and managing data and digital applications, including cloud computing, high-performance computing and artificial intelligence models, as further specified by the Executive Branch in accordance with the Brazilian Services Nomenclature System (NBS).
The law's wording does not clarify whether the regime will also cover operators whose core business consists of providing the physical infrastructure required to host equipment used for data processing, storage and management, including space, power, cooling and connectivity. The inclusion of these operators will ultimately depend on the NBS list to be published by the Executive Branch, which will determine the services eligible for the regime.
Enrollment requirements
Enrollment in the regime is conditional upon compliance with federal tax obligations, the absence of any record with the Federal Government Debtors' Registry (Cadin), and the legal entity not being enrolled in Simples Nacional.
Commitments required for access to the incentives
Enrollment in Redata requires the cumulative assumption of commitments concerning capacity made available to the domestic market, sustainability, electricity, water efficiency, and research, development and innovation (R&D&I). The main requirements include:
· Domestic market: making at least 10% of the effective supply of data processing, storage and treatment capacity installed using Redata benefits available to the domestic market. This obligation may be replaced by an additional 10% investment in R&D&I.
· Sustainability: complying with the criteria and indicators to be established by regulation and publishing a report containing the applicable indicators.
· Electricity: meeting the entirety of the electricity demand through supply contracts or self-generation from renewable or low-emission sources. Notably, during the legislative process in the Senate, the reference to “clean or renewable sources” was replaced with “renewable or low-emission sources”. This wording was retained in the enacted Law and may broaden the range of eligible energy sources, including potentially encompassing natural gas, depending on the implementing regulations.
· Water efficiency: maintaining a Water Usage Effectiveness (WUE) index of no more than 0.05 L/kWh, measured annually.
· R&D&I: investing in Brazil an amount equal to 2% of the value of products acquired in the domestic market or imported using Redata benefits in priority projects for the digital economy production chain.
For facilities located in Brazil's North, Northeast and Central-West regions, including the areas covered by regional development agencies, the domestic-market and ordinary R&D&I investment commitments are reduced by 20%.
Tax incentives and applicable conditions
Redata provides for the suspension of PIS/Pasep, Cofins, PIS/Pasep-Import, Cofins-Import, IPI and Import Duty on acquisitions and imports of electronic components and other ICT products intended for use as fixed assets by an enrolled entity. The incentives also apply to co-enrolled entities with respect to products used to manufacture ICT goods intended for an enrolled entity, and imports may be carried out on behalf and for the account of a third party.
The tax suspensions will apply exclusively to products listed by the Executive Branch. Import Duty suspension will also require the absence of equivalent domestic production. For enrolled entities, suspended taxes will be converted into a zero rate once the asset has been incorporated into fixed assets and the applicable legal commitments have been met. For co-enrolled entities, conversion will occur once the product has been sold and delivered to the enrolled entity.
IPI suspension will not apply to ICT products manufactured in the Manaus Free Trade Zone. Before conversion into a zero rate, the sale of an asset to a non-enrolled legal entity will require payment of the suspended taxes, plus interest and late-payment penalties, in addition to the taxes ordinarily levied on the transaction.
Although the regime's incentives may be claimed for five years, the PIS/Cofins and IPI benefits will remain in effect only through December 31, 2026, due to the transition established under Brazil's tax reform.
Non-compliance and consequences
Failure to meet the sustainability, electricity-demand, water-efficiency or R&D&I commitments within the period established by regulation will require the enrolled entity to pay the suspended taxes, plus interest and late-payment penalties calculated from the date on which the respective taxable events occurred.
Failure to comply with the domestic-market requirement will suspend Redata benefits for new acquisitions and prevent both the enrolled entity and its economic group from accessing them. If the breach is not remedied within 180 days after notice, the enrollment will be canceled, and the entity may only reapply after two years.
Final remarks and next steps
Redata may foster investment in digital infrastructure and increase demand for electricity from renewable or low-emission sources, creating opportunities for generation, trading and self-generation players. By linking tax incentives to commitments concerning sustainability, water efficiency, the domestic market and R&D&I, the regime aligns the expansion of data centers with Brazil's energy, environmental and technological development agendas.
Redata's implementation will still depend on regulations covering enrollment and co-enrollment, eligible goods and services, sustainability criteria, low-emission sources and evidence of electricity supply. Monitoring these regulations will be essential to determine the regime's practical scope.
Authors
Henrique Rojas, Heber Sacramento, Larianne Sampaio and Leonardo Negri
