Brazil’s Finance Minister Fernando Haddad will visit Silicon Valley this week to pitch a plan offering federal tax breaks for data center investments,
As part of his Friday trip to California, Haddad will meet with tech executives in Palo Alto for a breakfast on May 6 to promote Brazil as a hub for sustainable infrastructure, utilizing the nation’s plentiful renewable energy resources.
Haddad touts new tax policy to unlock $352 billion in investments and attract data centers
While speaking at a J. Safra-hosted event in São Paulo, Haddad confirmed the trip. He added that the new policy would help increase capital inflows and that Brazil could use its clean energy potential to draw in investment and construct data centers.
According to two sources who asked not to be named to discuss the private plans, the Finance Ministry estimates that the new policy could unlock about 2 trillion reais worth $352 billion in investments over the next ten years, including the spillover into construction, telecoms, and AI-related services.
Additionally, the same sources claimed that the plan, an executive order that needs congressional approval to become permanent, would also benefit ByteDance, the Chinese parent company of TikTok, which plans to invest in a data center.
The sources also revealed that the policy would exempt import duties, PIS, Cofins, and IPI, among other important federal taxes, from taxes on capital expenditures for data centers related to IT.
However, requests for comment from the Finance Ministry were not answered.
Brazil touts renewable energy and tax incentives to attract global tech investment
One of the two sources emphasized that electricity was not the primary expense for such endeavors, which in Brazil was mostly derived from renewable energy, with hydro, solar, and wind power accounting for over 80% of the total, but rather hardware depreciation, which is a major burden brought on by the expensive and complicated tax structure in the nation.
It is worth noting that the measure will not exempt non-IT investments, such as building construction. Therefore, the policy is anticipated to produce fiscal benefits that will bolster rather than pressure Brazil’s federal budget starting next year.
The strategy seeks to leverage Brazil’s diplomatic openness as a selling point for foreign investments in the face of escalating global trade tensions, such as U.S. tariffs and tensions with China.
Following this, one of the sources indicated that they avoided starting arguments and that everybody was their friend. Therefore, Brazil could serve the world without facing significant obstacles.
Moreover, President Luiz Inacio Lula da Silva approved a historic tax reform last year that included exemptions for capital spending, but they would not go into effect until 2033.
Biomas launches first reforestation project as Brazil’s carbon removal sector gains traction
Biomas, a Brazilian reforestation program that some giant corporations supported, aimed at recovering 1,200 hectares (2,965 acres) of Brazil’s coastal Atlantic rainforest with over 70 native tree species. The company recently revealed its first project.
The effort represented a significant milestone for the company. This followed a surge in momentum for Brazil’s nascent carbon removal sector, and large reforestation projects in particular, already underway from start-ups such as Mombak and re.green, which extend credit to companies that want to offset their greenhouse gas emissions voluntarily.
These two developers either purchased land from farmers and ranchers or entered agreements with them in which the farmers and ranchers reforested areas of the Amazon.
In the meantime, Biomas evaluated possible projects in the Amazon and started with a portion of the Bahia Atlantic rainforest.
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