Redata
Brazil's special tax scheme for data-centre operators, conditioned on an annually verified water-use cap and other sourcing requirements.
President Lula signed Lei 15.504 on 15 September 2026, bringing Redata into force with the Senate's water cap intact. Its tax suspensions reach a data-centre or AI build only while water use stays at 0.05 litres per kilowatt-hour, checked every year.
Last refreshed: 18 October 2026 · Appears in 1 active topic
Timeline for Redata
Mentioned in: Brazil auctions its grid to data centres
Data Centres: Boom and BacklashLula signs Redata law with water cap
Data Centres: Boom and BacklashMentioned in: Brazil links Scala Data Centers' AI City
Data Centres: Boom and BacklashBrazil ties tax break to water cap
Data Centres: Boom and BacklashBackground
Redata, Brazil's special taxation regime for data-centre services, suspends import duty, the PIS/Cofins revenue contributions on sales and imports, and IPI, the tax on industrialised products, for qualifying cloud and AI builds.
Five conditions attach to the relief. Water use must stay at or below 0.05 litres per kilowatt-hour, checked every year. Power must come from renewable or low-emission sources. At least 10% of actual processing and storage supply must serve the domestic market. Operators must invest in Brazil the equivalent of 2% of the value of products bought under the benefit, and publish an annual sustainability report. A water ceiling that low rules out evaporative cooling, so qualifying sites need closed-loop or air cooling for their whole working life.
The regime courts data-centre investment but adds no grid capacity. In Brazil's first connection contest, on 6 and 7 October 2026, seven qualified projects sought 451 MW at four São Paulo points and three won all 228 MW on offer.
The water cap survived the signature
Brazil's Senate approved PL 278/2026 on 1 September 2026 without changes of merit, sending it straight to the president rather than back to the Chamber of Deputies. The bill created Redata and wrote in its toughest condition, a ceiling of 0.05 litres of water for each kilowatt-hour, verified annually.
Lula signed it as Lei 15.504 on 15 September with no veto message. The cap now sits in Article 11-B, item IV, which the law inserts into Lei 11.196, Brazil's 2005 tax statute. The Treasury put Redata's cost at about 5.2bn reais in 2026, falling to about 1bn reais a year after. Because the limit rides on the tax break, it binds only claimants, and for as long as they keep the benefit.
Reference
What is Brazil's Redata tax regime?
Which taxes does Redata suspend?
Did Redata pass Brazil's Congress without changes?
What water limit does Redata set for data centres?
Why does Redata's water cap rule out evaporative cooling?
What conditions does Redata attach to its tax break?
Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Updated 18 October 2026. Editorial standards.