Brazil approves tax breaks to attract data centre investments

Brazil’s Congress has approved legislation exempting data centre-related equipment from federal taxes, in a move aimed at making the country more attractive to investors planning large-scale data infrastructure projects.

The Senate approved the bill on Tuesday after it had already received approval from the lower house. The legislation will now go to President Luiz Inacio Lula da Silva for ratification.

Under the approved measure, key federal taxes, including PIS, Cofins, IPI and import duties, will be exempted for certain capital expenditures linked to the data centre industry. The tax breaks will cover IT-related equipment such as servers and refrigeration systems.

The move forms part of the Brazilian government’s broader effort to lure data centre investments as demand for computing infrastructure grows globally.

Brazil had previously attempted to introduce similar incentives through an executive order issued in 2025. However, that proposal expired this year after Congress failed to vote on it.

The legislation approved on Tuesday follows a similar approach and was proposed this year by then-government leader in the lower house Jose Guimaraes, who is now Brazil’s minister for institutional relations.

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The tax exemptions are intended to reduce the cost of setting up and expanding data centre infrastructure in Brazil, potentially improving the investment case for companies seeking locations for computing facilities.

The measure comes as governments globally compete to attract data centre projects, which require significant investments in servers, cooling systems and other digital infrastructure.

For Brazil, the legislation represents an effort to position the country as a more competitive destination for data centre investment by lowering some of the upfront costs associated with imported and domestically acquired equipment.