Brazil weighs fiscal rule exception to revive data center policy, sources say

By Bernardo Caram

BRASILIA, March 20 (Reuters) - Brazil's government is considering asking Congress for a fiscal rule exception to revive its Redata data-center investment program, which expired in February before lawmakers could vote on it, two sources familiar with the matter told Reuters.

CONTEXT

• The move is being discussed because Brazil's 2026 budget guidelines bar expansions of tax benefits, effectively blocking the re-creation of Redata, the sources said.

• Redata was established by President Luiz Inacio Lula da Silva via executive order last year but lapsed without congressional approval.

• The program would have an estimated cost of 5 billion reais ($948.60 million) in 2026.

• Redata offers PIS/Cofins and IPI tax exemptions on IT equipment purchases for data centers and import-duty waivers for items not produced domestically.

• The exception is being negotiated carefully to prevent lawmakers from using it to approve broader fiscal rule exceptions, one of the sources said.

KEY QUOTES

• "The idea is to create a specific exception for Redata, which has already been widely debated in Congress and is already well priced in and accepted by the market," one of the sources said.

• "It makes sense for you to allow this exception in order to attract investment to the country," they added.

($1 = 5.2709 reais)