Digital Convergence – 02/26/2026
By Luís Osvaldo Grossmann
The government needs to decide whether to repeat what it did for the chemical industry and circumvent the ban on incentives foreseen in the 2026 Budget, or avoid opening the floodgates wide.
Without dialogue in the Senate, the root of the beating he took at Redata, The government will now have to decide whether to abandon incentives for data centers or widen the loophole for new tax benefits. Finance Minister Fernando Haddad has already said that there are ways to do this, although they are not desirable. This is because it would be the second consecutive breach of the express prohibition in the 2026 Budget against new exemptions.
“If Congress wants, we will find a legal way to reinstate [the Redata program]. But there needs to be political will from the Senate to consider the matter,” said Haddad after the failed session that did not consider Bill 278/26 on Wednesday, February 25th. He acknowledged that the legal path is not simple, but it is possible. “We have to be careful with fiscal law. But there is a team here studying how to reinstate the program without violating this principle of respect for the fiscal responsibility law,” he added.
The main problem is that there is a legal impediment in this year's Budget, foreseen in article 29 of Law 15.321/25, which states that "in 2026, the following is prohibited: I – expansion, extension or prolongation of tax expenditure, except as stated in item IV of Annex II of this Law". This is why the Redata needed to be approved during the validity of Provisional Measure 1318/25, since the MP was a federal law that provided a loophole for IPI, PIS and Cofins exemptions for data centers.
Without it, a "legal loophole" is to include these incentives in the exceptions mentioned in article 29 of the Budget Law. And this is not an innovative path, since it has just been used to guarantee tax incentives for the chemical industry – PLP 14/26 was approved in the same Senate session in which the Redata vote was expected. There are reasons to circumvent the prohibition and guarantee Redata. Even if the overly optimistic projections of "trillions" in investments are not confirmed, the Federal Revenue estimates that the reduction of up to 80% in data center costs will generate at least R$ 5.8 billion as early as 2026.
“We are in talks with the Treasury to evaluate the use of the exceptions in article 29,” says the director of government relations at the Brazilian Association of Software Companies, Marcelo Almeida. ABES, along with Brasscom and ABRIA, lamented the decision of the Senate president, Davi Alcolumbre (União-AP), not to put the Redata to a vote. But they were not the only ones. Even the Brazilian Association of the Electrical and Electronic Industry publicly defended a swift approval of the special regime for data centers.
“Abinee reinforces its appeal for an urgent solution to allow the voting on Bill 278/26, which creates Redata. The Association is available to Congress and the Executive Branch to engage in dialogue in the search for a solution that will enable the approval of the matter,” the entity said in a statement to Convergência Digital. According to Abinee, “the approval of Redata will stimulate the industry established in the country and bring predictability to investments.”.
“Redata will strongly contribute to expanding the technological density of the local industry, since our country already has manufacturing plants capable of supplying the strong demand that will exist in the production of electronic products, such as servers (processing), storage, and network devices (switches/routers), power and cooling equipment, necessary for the operation of the data centers that will be installed in Brazil.”
In practice, The national industry had already celebrated the government's recent decision to increase import taxes. For a range of electronics, favoring local equipment suppliers. Redata provides import tax exemption, but only for products without a national equivalent – although this is an area where there is some subjectivity regarding how similar a national product is.
It's worth noting that the fall of Redata didn't displease everyone. Even within the government, there are those who believe it's better to do without a package of tax incentives that tend to benefit multinational corporations much more than local suppliers. The amendment, as structured in Provisional Measure 1318/25 and later in Bill 278/26, represented a victory for the Ministry of Finance over the Ministry of Development., which preferred a more comprehensive policy for the data center sector, including a provision that certain data could not be stored in international facilities.
The day after the lack of a vote, the main interpretation after the news, however, is that the defeat in the Senate has nothing to do with the Redata program itself, but is a direct result of the lack of dialogue between the government and Senator Davi Alcolumbre. It is for this reason that the Minister of Finance, the main sponsor of the initiative, acknowledged the need to ease tensions. "We will have to understand with the President of the Senate whether there is resistance to the program or whether a negotiation is possible," said Haddad.
