President Luiz Inácio Lula da Silva signed the REDATA law on September 15. It cuts taxes on qualifying data center equipment, which high import duties had made more expensive in Brazil than elsewhere in the region. In return, operators must offer at least 10% of qualifying computing services to Brazilian customers and invest 2% of the value of the tax-advantaged equipment in local research and development. The government says 60% of Brazilian digital data is now processed abroad.
Brazil's pitch rests on power: electricity costs less than half the US level, and about 87% comes from renewables. AWS has spent more than $3.8 billion on Brazilian infrastructure since 2011 and pledged $1.8 billion more through 2034. Microsoft has committed $2.7 billion over three years, and Google plans to double its cloud infrastructure in the country by 2030.
Obstacles remain. A renewable energy executive says Brazil needs more transmission lines, and officials disagree on whether power bills will rise. Federal prosecutors have also sued to halt a TikTok-linked project in Ceará until an environmental study and a consultation with the Indigenous Anacé people take place.