Chamber accelerates project that creates incentives for installing data centers in Brazil

This Tuesday, the Chamber approved the urgency request for the bill that establishes Redata, the national incentive plan for the data center sector. The instrument allows the initiative to be analyzed directly in plenary, without the need to go through committees.

The changes were initially addressed through a Provisional Measure, but the government decided to forward the matter through a bill due to the lack of agreement with the Chamber. The project is authored by the government leader in the House, José Guimarães (PT-CE).

There is still no defined rapporteur for the project, but deputies André Figueiredo (PDT-CE) and Luisa Canziani (PSD-PR) have already expressed their interest in providing an opinion. The merit of the project, according to the president of the Chamber, Hugo Motta (Republicanos-PB), should only be voted on after carnival.

Under the initiative, companies will not pay taxes on the purchase of equipment and in return will have to invest in national industry and make sustainable use of energy and water.

The project makes an “advance” of changes that will be implemented in the Tax Reform in 2027. Companies will have an exemption from IPI, PIS/Pasep, Cofins when purchasing ICT (information and communication technologies) equipment for data centers. If this equipment is not produced in Brazil, there will also be an exemption from import tax.

The measure will require a tax waiver estimated at approximately R$7.5 billion over the next three years. The Ministry of Finance points out that the stimuli have the potential to attract investments of R$2 trillion over the next ten years.

In the government’s assessment, the Tax Reform created a series of “disincentives” for investment in the sector before 2027, the date on which the tax cost will be lower.

Because of this, the MP and then the project emerged, to ensure that companies will not hold back on investments next year. Joining Redata will be optional. In return for the benefits, companies will have to invest 2% of their investments in research and development in digital production chains in Brazil, and at least 10% of the services provided will have to be destined for the domestic market.

This last point is important for the government, which found that approximately 60% of data in Brazil is stored in structures outside the country, mainly in the United States.

The idea is to make Brazil more self-sufficient in this matter, and reach the mark of only 10% of data stored outside Brazil. Furthermore, the projects to be implemented must meet sustainability requirements, using renewable or clean energy.

Datacenters will also have to guarantee low water use, with systems that guarantee water efficiency close to 0%.

The national plan will also have mechanisms to encourage the redistribution of data centers throughout Brazil, as more than half of the projects are currently installed in the Southeast.