Regulatory stagnation of Redata threatens investments in data centers in Brazil.

Globally, Brazil is seen as a country with great potential to become a data center hub, due to its vast territory and the availability of renewable energy sources. Estimates from Brasscom (Brazilian Association of Technology Companies) indicate that investments in the sector in the country could reach US$92 billion by 2031.

This scenario was driven by Redata (Special Tax Regime for Data Center Services), the practical and tax arm of the PNDC (National Data Center Policy), which is currently suspended.

With the increased use of AI (artificial intelligence) and cloud computing in recent years, the expansion of digital infrastructure has gained significant traction in Latin America, particularly highlighting Brazil's consolidation as a regional hub.

The country concentrates approximately 48% of the installed infrastructure in operation in Latin America and 71% of all capacity under construction, according to... JLL Latin America Data Center Report.

However, the maintenance of this Brazilian leadership is largely based on the availability of fiscal policies and exemptions, such as the suspension of the collection of IPI, PIS/COFINS and import tax through the ex-tariff proposed by Redata.

Current status of Redata

In February 2026, the period of Provisional Measure No. 1.318/2025, which established the Redata (a system for adjusting employment contracts), ended. After this period, the regime awaits a vote for approval or adjustments by the Federal Senate on Bill No. 278/2026, intended to replace the previous Provisional Measure.

In this context, the amount of tax exemptions foreseen in the federal budget of R$ 5,2 billion remains allocated to Redata, but its use and allocation to participating companies depends on the approval of the legal basis.

The policy provided direct savings of approximately 28% on the cost of acquiring data center equipment for subsequent operation, accounting for 30% of total reductions and 2% as a counterpart in investments in R&D (Research, Development and Innovation), sustainability, clean energy and making capacity available to the domestic market.

However, if there is no approved legal basis in the current fiscal year, the projected amount cannot be used by companies, significantly impacting the budgetary planning of companies in the sector.

Beyond the financial benefits, companies participating in Redata use clean energy for their power supply and allocate a minimum of 10% of the acquired data center capacity to the domestic market, stimulating a more sustainable computing infrastructure chain in Brazil.

Therefore, the program encourages the diversification of the country's energy chain, with projects in renewable energies of different scales to supply these data centers, in addition to boosting the ICT sector, considering that the expected volume of investments by companies is up to R$ 2 trillion in ten years of tax incentives in the segment, according to the Sector Report 2025 – ICT Macro-sector.

Outlook for the data center market in Brazil

Although there is a growing demand for digital infrastructure, the process of installing data centers involves both technical and regulatory issues.

The choice of location and approval for construction must take into account aspects such as adequate electrical and sanitation infrastructure, licensing and measurement of environmental impacts, qualified labor, compliance with tax issues, and the security of the information that will be processed in these systems.

In the Brazilian context, even with technical obstacles, the last few years have been marked by significant progress in regulatory matters.

Formal recognition as a strategic infrastructure for the country, the consolidation of public policies in the sector, such as the PNDC (National Consumer Protection Policy) and Redata (National Data Protection Regulation), and greater integration with the other pillars of industrial policy defined by NIB (New Industry Brazil) have highlighted the country in relation to global powers and fostered internal competitiveness.

Conversely, the interruption of Redata, without a clear plan for its continuation, weakens the competitive advantage provided by this regulatory framework and legal mechanisms designed to ensure investments in the sector, which currently represents one of the main bottlenecks for the implementation and maintenance of data center infrastructure in Brazil.

This regulatory instability delays projects and investments planned for this year, increasing uncertainties related to both the development of these structures and the expansion of the ICT sector as a whole. This incentive format allows the entire chain to manage the flow of digital information with national autonomy, ensuring greater control by public actors over this circulation of information.

Perspectives on regulatory instability

In the Latin American market, Brazil has the largest installed base of data centers, as well as the greatest processing capacity, totaling approximately 1GW of IT load. The country also accounts for more than 40% of all investments in the region.

There are at least four operators of this type of structure in the country, in addition to other companies that support manufacturing operations for companies in the ICT sector. Globally, the country is situated in an intermediate position, behind the US, Europe, and Asia, with a smaller effective market than these regions.

Therefore, this unpredictability could slow down foreign investment in Brazil or redirect it to other countries with greater regulatory stability and lower tax burdens, such as Chile and Mexico, consequently threatening its competitive position in the market.

To ensure greater stability for data center projects in Brazil, an urgent vote on the Redata bill is necessary.

However, given the issues surrounding the proposed energy regulation and the priority period for electoral debate, alternative instruments to promote innovation may enable the implementation and construction of new structures in the short term.

Additionally, as a damage mitigation mechanism, investments in data centers could be included within incentives such as... ICT Law and the PADIS (Program to Support the Technological Development of the Semiconductor Industry), on a temporary basis, promoting investments in national projects and reducing the cost for companies with other incentivized products already covered by the tax benefit.

Furthermore, the use of instruments less dependent on legal frameworks regarding data centers, such as potential funding opportunities from Finep and BNDES, could also encourage the implementation of these structures.

In this sense, the regulation of Redata and policies related to data centers is essential, since they are the basis of the ICT infrastructure for the digital processing of information. Data centers enable the development of highly complex services and guarantee the security of information and digital documentation in the country.

These aspects are fundamental for government tracking and the security of transmitted information, as well as contributing to the improvement of services provided by banking institutions and businesses in various sectors.

To track the processing status and potential approval of Redata, as well as other instruments that impact investments in data centers in Brazil, companies can rely on... specialized consultancies in incentives for innovation.

This support allows for the identification of policies and mechanisms compatible with operations, such as public or private funding opportunities for the ICT sector. Currently, it is not possible to determine the future of the regime and incentives for data centers in Brazil.

However, collaboration between the public and private sectors is essential to push the regulation of Redata onto the fiscal agenda and to develop alternative policies capable of preserving investments and fostering foreign capital, contributing to increased competitiveness in the Brazilian market.

The opinions and information expressed are the sole responsibility of the author and do not necessarily represent the official position of the author. Canal Solar.