Market Intelligence
Renewable Energy Electricity Infrastructure Brazil

Brazil Energy Electricity Infrastructure

Brazil’s new REDATA tax incentive slashes costs for data centers powered by low-emission energy sources, creating fresh opportunities for U.S. firms.

Brazil has introduced the REDATA program (Provisional Measure 1318/2025), a tax incentive designed to attract data center investments that operate exclusively on low-emission energy sources. By offering federal tax exemptions on ICT equipment and infrastructure, REDATA lowers capital costs while promoting responsible energy management. The initiative leverages Brazil’s diverse energy matrix, providing U.S. technology companies with a cost-effective gateway into the rapidly expanding Latin American digital economy.

For U.S. energy firms, REDATA creates opportunities to partner with local utilities, export advanced power technologies, and participate in the expansion of energy infrastructure essential to data center operations. To take advantage of REDATA, U.S. companies should engage with Brazilian regulatory experts, explore strategic energy partnerships, and initiate authorization processes with the Federal Revenue Service. This program positions U.S. tech and energy companies to lead in Brazil’s ongoing digital transformation.

REDATA represents a strategic entry point for U.S. firms to expand in Brazil’s growing digital infrastructure sector while supporting the country’s shift toward more efficient and innovative energy solutions.

Program Overview
REDATA is a tax incentive program designed to stimulate the development of data centers in Brazil by exempting federal taxes, including PIS/Pasep, Cofins, IPI, and Import Duty, on ICT equipment and components used as fixed assets. These tax exemptions convert to a zero-rate upon asset incorporation, provided companies comply with operational and environmental requirements.

To qualify for REDATA, companies must:
•    Use 100% low-emission or alternative energy sources in their operations.
•    Demonstrate high water efficiency.
•    Commit to innovation and efficiency improvements.
•    Obtain prior approval from Brazil’s Federal Revenue Service.

Energy costs typically represent 15% to 50% of a data center’s operating expenses, primarily due to powering IT equipment and cooling systems. To reduce these costs, operators focus on improving Power Usage Effectiveness (PUE), a measure of how efficiently energy is utilized. Lower PUE values indicate that a greater share of energy is directed toward computing rather than overhead functions like cooling. Effective energy management is therefore essential for long-term financial performance. Common strategies include advanced cooling technologies, optimizing server utilization, and investing in high-efficiency infrastructure.

For more information on opportunities for U.S. companies, please contact Igly Serafim Igly.Serafim@trade.gov, Energy Commercial Specialist, U.S. Commercial Service, São Paulo.