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Government Creates Special Regime to Attract Data Centers, with Tax Exemption and Requirement for R&D. Meanwhile, Tension with the U.S. Grows After 50 Percent Tariffs and Trade Investigation.
On Wednesday, September 17, 2025, President Luiz Inácio Lula da Silva signed a Provisional Measure that establishes the National Data Center Policy and creates the Special Tax Regime for Data Center Services (Redata).
The PM eliminates federal taxes such as PIS, Cofins, and IPI on the purchase of ICT equipment and also removes the import tax when there is no national equivalent, with immediate effect until Congress reviews it. According to the government, the proposal aims to reduce the cost of implementation in the country and accelerate investments in digital infrastructure.
At the same event, Lula sent a message to President Donald Trump stating that there is no veto on U.S. companies, or from any country, as long as they comply with Brazilian law. The government sees the PM as a signal of regulatory predictability to attract cloud, AI, and critical services of the digital economy. The official estimate is to unlock hundreds of billions of reais in investments over the next decade.
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The statements come in an environment of trade tension. In July, the Office of the U.S. Trade Representative (USTR) opened a Section 301 investigation into Brazil’s actions and policies in areas such as electronic payments, ethanol, intellectual property, and deforestation. A public hearing was held in early September, and the process is ongoing.
Data Centers: What Changes for Investment and Competitiveness
The PM creates an incentive regime that reduces costs for servers, storage, network, and cooling of data centers, lowering the CAPEX for new projects in Brazil. The rule applies to equipment produced here and also to imported items without national equivalents, with exemption from II in such cases. The goal is to lower and accelerate the installation of critical infrastructure, which is currently seen as expensive in the country.
There are counterpart conditions: benefited companies must invest 2 percent of the value of the equipment in research, development, and innovation in priority programs, strengthening the local ICT chain. The government also linked the policy to the agenda of the New Industry Brazil, aiming for gains in cloud, AI, IoT, and advanced manufacturing.
According to projections cited by international agencies, the combination of incentives and legal security could lead to trillion-dollar investments over the next ten years, as long as Congress maintains the backbone of the PM. Until then, the measure is effective immediately, as stipulated by the Constitution for PMs.
The Background: 50 Percent Tariffs and Section 301
While the government seeks to attract data centers, bilateral trade faces headwinds. In August and September, Brazilian exporters of beef reported a sharp decline in shipments to the U.S. after the 50 percent tariff applied by Washington, which in some cases adds up to 26.4 percent over the tariff-free quota. Industry entities indicate that monthly volumes have fallen to levels well below historical averages.
The USTR maintains that the investigation opened on July 15, 2025 seeks to examine Brazilian practices deemed “unfair or discriminatory,” citing PIX, preferential tariffs, IP, ethanol, and deforestation. The Brazilian government contested the allegations on August 18, asserting that it does not adopt discriminatory policies and calling for “constructive dialogue” to avoid unilateral measures that harm the multilateral system. A public hearing took place on September 3 and the case remains under evaluation.
In the broader regulatory sphere, recent executive orders in Washington reinforced widespread surcharges in certain mutual scenarios. This context increases uncertainty for exporters, although it does not close the door on sectoral agreements or legal challenges in the U.S., as suggested by Brazilian authorities.
The Message to Foreign Investors
By asserting that there is no veto on U.S. companies, the government tries to separate the agenda of attracting digital investment from the trade dispute. Market perception is that the legal security of Redata — clear exemptions, criteria for national equivalence, and R&D requirements — creates predictability for big techs and colocation operators’ long-term decisions.
For the effect to materialize, industry interlocutors highlight two points. First, the passage in Congress over the next 120 days is crucial to preserve the core of the incentives. Second, factors such as energy costs, backbone connectivity, environmental licensing, and access to low-latency areas remain relevant in the viability calculation of projects.
If the policy succeeds, Brazil could internalize data processing currently done abroad, generate skilled jobs, and reduce latency in critical digital services. Additionally, the R&D counterpart tends to strengthen the local supply chain in ICT, with indirect impacts on cybersecurity and digital sovereignty.
Brazil is attempting to attract billions in digital infrastructure while facing tariff pressures and a sensitive investigation in Washington. For you, is the PM a bold step to reduce costs and accelerate digitization or does it run the risk of turning into a bargaining chip in the dispute with the U.S.? Do you think Lula’s message to Trump calms foreign investors or intensifies political tension? Leave your comment.
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