Brazil plans to offer major federal tax breaks on IT equipment to attract over $350B in data center investments over the next decade.
Projects must use 100% renewable energy and support Brazil’s AI ecosystem to qualify.
The initiative positions Brazil as a sustainable digital hub ahead of broader 2033 tax reforms.
Brazil’s Finance Minister, Fernando Haddad, is set to visit Silicon Valley on May 6, 2025, to promote a new policy aimed at attracting data center investments by offering federal tax exemptions on IT-related capital expenditures. The initiative targets taxes such as PIS, Cofins, IPI, and import duties, while excluding construction-related costs. The government estimates this could unlock approximately 2T reais (around $352B) in investments over the next decade, stimulating growth in sectors like construction, telecommunications, and AI.
To qualify for these incentives, projects must utilize 100% renewable energy and contribute to Brazil’s AI ecosystem. The policy is designed to position Brazil as a sustainable infrastructure hub, leveraging its abundant renewable energy resources. Companies like ByteDance, the Chinese parent company of TikTok, are expected to benefit from this initiative.
This measure serves as a fast-track complement to broader tax reforms set to take effect in 2033, aiming to encourage immediate capital inflows while reinforcing fiscal stability. The policy requires congressional approval to become permanent. Haddad’s pitch emphasizes Brazil’s clean energy potential and its politically neutral stance amidst global trade tensions, positioning the country as a strategic global data hub.