By Marcela Ayres and Bernardo Caram
BRASILIA (Reuters) -Brazil plans to announce a tax incentive plan in early September aimed at attracting foreign tech companies to build data centers in the country, two economic policy officials told Reuters.
The sources, who requested anonymity to discuss the confidential plans, said the “Redata” program is designed to build goodwill with big tech firms and also more broadly with the United States, which imposed a 50% import tariff on Brazilian goods.
U.S. President Donald Trump has tied the tariff to the trial of Brazilian former President Jair Bolsonaro, as well as complaints about regulation of U.S. tech companies, including alleged censorship of social media platforms.
The Brazilian officials said the data center incentives may help to shift the focus of talks to mutually beneficial investments.
“This is in American companies’ interest. Redata reduces capital investment costs. Some U.S. states are restricting data center investment due to energy issues, while we have surplus energy,” one source said. “It also helps negotiations with the U.S. – it’s a positive signal.”
The executive order, initially slated for the first half of the year, had been shelved amid political turbulence when the government raised a tax on financial transactions.
Separately, Brazil has also dropped a plan to tax big tech firms, fearing it could escalate U.S. trade tensions.
Reuters reported in April that the data center incentives would exempt technology investments from federal taxes – including PIS, Cofins, IPI and import duties – if projects meet criteria such as 100% renewable energy sourcing.
Brazil took an initial step in July by updating rules for special “export processing zones” (ZPEs), which developers are eyeing for data center projects.
The new framework, which must be approved by Congress to remain valid, requires all ZPEs to source power from renewable plants yet to be built.
The “Redata” plan has been eagerly awaited by investors eyeing the potential of Brazil as a hub for data centers tapping cheap and plentiful renewable energy.
One such project, planned at the Pecem port complex in the northeast, is a joint venture between energy firm Casa dos Ventos and ByteDance, the parent company of TikTok, sources previously said.
(Reporting by Marcela Ayres and Bernardo Caram; Additional reporting by Leticia Fucuchima in Sao Paulo; Editing by Brad Haynes, Kirsten Donovan)
