Brazil is tying data center tax incentives to how facilities source electricity and meet sustainability requirements
The incentives will be available to companies that meet electricity demand through renewable energy
The bill 278/2026 will come into force following presidential sanction
Brazil’s Federal Senate has approved tax incentives for data centers under Bill No. PL 278/2026, creating a special tax regime for data center services, tying these to renewable energy generation and use.
The bill, known as the Regime Especial de Tributação para Serviços de Datacenter (Redata), now awaits presidential sanction to take effect.
It offers tax exemptions to companies that install or expand data centers in Brazil, particularly facilities focused on cloud computing and artificial intelligence (AI). Eligible companies can receive a five-year suspension of taxes on equipment purchases. The suspended taxes include the Import Tax, PIS/Cofins, PIS/Cofins-Import, and Industrialized Products Tax (IPI).
One of the key conditions of the incentives is that data center operators must meet their electricity demand through power supply contracts or self-generation from clean or renewable sources. These include solar and wind, as well as lower-emission sources such as hydropower, biomass, and biogas.
Companies will also be required to meet sustainability criteria to be established through regulation. The bill also sets a water-efficiency requirement for cooling systems. Eligible facilities must have an annual Water Efficiency Index of no more than 0.05 liter of water per kWh.
Companies must additionally invest in Brazil an amount equivalent to 2% of the value of products purchased domestically or imported under the tax benefit. They must also direct at least 10% of their installed effective data processing, storage, and treatment capacity to the Brazilian market.
Brazil's data center sector drove renewable energy contracting in 2024, accounting for most self-generation deals in the country's free power market, according to a Clean Energy Latin America (CELA) study. Data centers were linked to 30 of 31 long-term solar and wind contracts signed during the year, representing 1.7 GW of solar and 0.6 GW of wind capacity.
According to JLL Research, the country’s energy availability, alongside a large consumer market, is helping draw national and international players to the country’s data center space. Brazil’s access to clean and relatively low-cost power is emerging as a key factor attracting data center investment.
Brazil’s proposed rules come amid growing efforts globally to link data center expansion with cleaner electricity. Australia is developing an energy framework for AI data centers that will make it mandatory for data center operators to demonstrate their electricity demand is matched by additional renewable energy (see Australia Details RE Framework For AI Data Centers).
In another fast-expanding data center market, Spain is proposing renewable energy consumption rules for new data centers with more than 1 MW of capacity (see Spain Pushes For Hourly RE Consumption For Data Centers).
