ReData – Tax Incentives for Data Center Expansion and Boosting Brazil’s Digital Economy

Summary

On September 17, 2025, Provisional Measure No. 1.318/2025 was published establishing the Special Tax Regime for Data Center Services in Brazil, “ReData”. The initiative is part of the National Data Center Policy and the New Brazilian Industry strategy, aiming to boost the digital economy, especially in areas such as cloud computing, artificial intelligence, smart factories, and the Internet of Things.

Scope of Application

ReData aims to expand Brazil’s capacity for data storage, processing, and management by encouraging the installation and expansion of data centers in the country. Its focus is on the promotion of technological development and the reduction of dependence on digital services provided abroad.

For the purposes of Provisional Measure No. 1.318/2025, data center services are defined as those involving infrastructure and computing resources dedicated to the storage, processing, and management of digital applications, including cloud computing, artificial intelligence, high-performance computing and related services.

Beneficiaries

Legal entities that implement projects for the installation or expansion of data center services within Brazilian territory may apply for qualification under the ReData regime, in accordance with conditions to be defined by future regulations. The regime also provides for the co-qualification of legal entities that supply information and communication technology (ICT) products, either manufactured or commissioned by them, for incorporation into the fixed assets of a qualified ReData beneficiary.

Participation

The regime provides two forms of participation:

(a) qualification, intended for legal entities implementing projects to install or expand data center services within Brazilian territory; and
(b) co-qualification, aimed at legal entities that supply ICT products to be incorporated into the fixed assets of a ReData qualified beneficiary.

Both qualification and co-qualification will be granted by the Federal Revenue Service, in accordance with specific regulations to be issued.

Tax Benefits

• Suspension of federal taxes on revenue and imports of goods destined for the fixed assets of qualified legal entities, including PIS/Cofins, IPI (except for goods manufactured in the Manaus Free Trade Zone) and Import Tax (when there is no national equivalent).
• Co-qualified entities may also use the tax incentives to resell goods to ReData qualified entities.
• Time limitation: The tax benefits mentioned in art. 11-C will take effect on January 1, 2026, and are limited to the year 2026, in accordance with the Tax Reform transition.

Requirements and Obligations

Beneficiaries from ReData must invest at least 2% of the value of acquired products (domestic or imported) in research, development, and innovation projects focused on Brazilian digital production chains.

Additionally, it is mandatory for beneficiaries to allocate at least 10% of data processing, storage, and management capacity for the domestic market. This requirement is reduced by 20% for operations located in the North, Northeast, and Central-West regions of Brazil.

Projects covered by the regime must meet strict sustainability criteria, including the exclusive use of energy from renewable or clean sources and specific standards for water efficiency.

Failure to comply with these obligations results in the loss of tax benefits, mandatory payment of suspended taxes, including applicable fines and interest, and prohibition from reentering the regime for a period of two years.

Regulation and Oversight

Responsibility for monitoring and ensuring compliance with the targets lies with the Ministry of Development, Industry, Trade and Services and the Ministry of Finance, which may also issue complementary regulations.

Entry into Force

Provisional Measure No. 1.318/2025 comes into force on the date of its publication, producing immediate effects for all provisions, except for the tax benefits provided in Article 11-C, which will take effect starting January 1, 2026.