- Executive order grants tax breaks for IT capex in data centres
- Government expects $377 billion investment over next ten years
What happened: Brazil removes taxes on data centre tech to up its global appeal
Brazilian President Luiz Inácio Lula da Silva signed an executive order that waives key federal taxes for data centre-related capital expenditures. The taxes exempted include PIS, Cofins, IPI, and import duties on IT equipment such as servers and cooling infrastructure. The policy aims to unlock roughly 2 trillion reais (about US $377 billion) in investment over the next decade.
Alongside the tax breaks, the government proposed a bill to regulate digital competition. This bill would give Brazil’s competition authority, CADE, clearer powers over tech firms with “systemic relevance” and establish a dedicated unit for oversight in digital markets. The executive order takes immediate effect, while the competition regulation bill requires congressional approval before becoming law. Brazil also attaches conditions: eligible data centre projects must use 100% renewable energy and reserve some capacity for domestic customers.
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Also read: Huawei targets bigger role in Brazil data centre market
Why it’s important
The measure could significantly lower the cost barrier for setting up data centres in Brazil, especially for multinational cloud providers and hyperscalers. Tax relief on essential IT equipment means firms may invest more aggressively in capacity and scale. Renewable energy requirements align this initiative with global environmental standards and climate responsibility.
The proposed competition reforms play a crucial role in ensuring that this influx of investment does not lead to monopolistic behaviour. Strong oversight by CADE and a digital markets unit could help maintain fair competition among both local and foreign tech players.
For Brazil, this policy signals its ambition to become a hub for data centre infrastructure in South America. The investment target—US $377 billion—reflects both confidence in Brazil’s energy supply and recognition of its strategic location.
