Brazil Increases Support for Data Center Development

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Brazilian President Luiz Inacio Lula da Silva signed a provisional measure supporting a special tax regime for data center services in the country, aimed at promoting their development over the next decade.

The plan includes federal tax breaks for the purchase of equipment for building, acquired abroad or from Brazil. For imported items, the provisional measure also exempts import duties.

In exchange, companies will be required to invest 2% of their capital expenditure in research, development and innovation projects that support the development of the industry, and guarantee that at least 10% of a data center's processing and storage capacity is dedicated to Brazil's local market.

Additionally, data centers will need to adhere to water-efficiency standards and use renewable or clean energy for their power supplies. Most of Brazil's power generation comes from hydropower, while wind and solar capacity continue to grow.The government will publish more environmentally related requirements on this matter in the next few months.

Before becoming law, the provisional measure must be debated and approved by both houses of Brazil's National Congress.

The government expects to attract 2 trillion reais (approximately US$377 billion) through the development of data centers across the country in a decade. Earlier this year, Brazil's Minister of Finance Fernando Haddad travelled to Silicon Valley to discuss his nation's plans and policy on data center expansions.

"In addition to stimulating investment in a highly strategic sector, the program boosts the development of the country's digital economy in the areas of chips, software, fiber optic networks and machinery production, among others, generating more and better jobs throughout the production chain of the digital economy," said Brazil's Vice President Geraldo Alckmin.

Industrial Info is tracking 95 active data center units in Brazil and 154 related projects valued at US$18.61 billion.

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