Brazil Congress Approves Tax Break for Data Centers

Brazil's Congress has moved to bolster its data center industry by approving a bill that exempts related equipment from federal taxes. This significant legislative step, which secured Senate approval following a prior endorsement from the lower house, now awaits President Luiz Inacio Lula da Silva's signature for ratification.

The approved text targets key federal imposts, including PIS, Cofins, IPI, and import duties. These exemptions will apply to essential IT capital expenditures crucial for data center operations, such as servers and sophisticated refrigeration systems. This strategic tax relief is intended to significantly lower the barrier to entry and operational costs for establishing new data center facilities within Brazil.

This legislative effort follows a previous attempt in 2025 when the government issued an executive order for a similar purpose. However, that proposal did not pass Congress within the allocated timeframe. The current bill, mirroring the intent of the earlier order, was reintroduced and successfully navigated the legislative process this year, signaling a renewed commitment to attracting significant digital infrastructure investments to the nation.