The Brazilian government is seeking to lure both the United States and China into new multi-million dollar datacenter investment opportunities in the country, as the global race for hosting AI facilities heats up.
Brazil courting China and US for datacenter investments
Published: Thursday, May 01, 2025
The Brazilian government is seeking to lure both the United States and China into new multi-million dollar datacenter investment opportunities in the country, as the global race for hosting AI facilities heats up.
High-ranking Brazilian officials are visiting their Chinese and US counterparts and executives to discuss the opportunities, dangling tax breaks as investment carrots.
Next week, finance minister Fernando Haddad is expected to formally announce tax exemptions on imports of servers and computing machinery at a private event in Palo Alto, California.
The event is scheduled to take place on May 6. It will bring together "a select group of providers, hyperscalers, infra investors and vendors," a market source familiar with the matter told BNamericas, speaking on condition of anonymity.
According to the source, the room will be "filled with investors" whose companies surpass US$1tn in assets.
The meeting is being organized in coordination with the US-Brazil chamber of commerce Amcham. BNamericas found that Haddad could visit Nvidia's headquarters in Santa Clara during the same trip.
Officially, the finance ministry is not commenting and the event does not appear on Haddad's public agenda.
The tax break was widely expected by the industry and will be the core item of a national datacenter policy, which was first reported by BNamericas.
Costs of servers and computing capacity equipment in Brazil are seen as undermining the country's competitiveness.
"The combination we have today with incentives, [energy] self-production and with the tax categories that are already present for the infrastructure components that those who build datacenters buy or import were already enough to make us competitive," said the source.
"Where Brazil lost a lot in competitiveness was in the tariffs imposed on what datacenter customers [AWS, Microsoft, Google, among others] import, which are the computing resources that go inside the datacenters. These arrived with up to 57-59% taxes. It's for these that the government is providing incentives."
There were doubts about the regulatory format of the tax measure once the government announces it, whether via a regular bill or a provisional measure (MP). The latter takes immediate effect but must subsequently be voted on by congress.
According to the source, the tax break to be announced by Haddad will be via an MP.
The urgency of the issue and the consensus on datacenter investment, which is considered to be an easy sell in congress, weighed favorably towards the MP.
"We hire 60% of our IT outside the country, which means not only sending dollars abroad, but also an underinvestment in Brazil," Haddad said during an event at a bank in São Paulo this week.
"This is inexplicable, because Brazil has the best competitive advantages in relation to datacenters, especially with regard to the existing cabling network in the country. We [also] have the best wind, the best sunlight and we can build datacenters next to these parks, with very low transmission costs. I believe that the launch of this policy will greatly improve this investment," he added.
China
Brazil is also courting China to set up datacenters in the country or to invest in local facilities.
Recently appointed communications minister Frederico Filho met this week with executives of short video social network Kwai in Beijing to discuss datacenters, among other things.
During the meeting, according to a statement from the communications ministry, Filho cited the national datacenter policy as an opportunity to boost the tech sector in Brazil, strengthen digital infrastructure and attract new investments,
"Brazil is open to international investment that generates innovation, connects people and drives economic development. Our goal is to strengthen the digital environment and create partnerships that generate concrete benefits for the Brazilian population," Filho said.
The minister was part of a delegation to China led by chief of staff Rui Costa.
The delegation also included Petrobras CEO Magda Chambriard, the president of Transpetro, Sérgio Bacci, and representatives from the ministries of transport, health, industry and commerce, and mines and energy, as well as development bank BNDES.
Also this week, it was reported that TikTok owner ByteDance is mulling investing in a renewable-powered datacenter of energy firm Casa dos Ventos in Brazil's Ceará state.
According to reports, national grid operator ONS initially rejected Casa dos Ventos' project citing impacts on the power grid connection that had not been fully dimensioned by the company.
"They [Casa dos Ventos] are putting huge pressure on the Ceará government to politically approve this connection and to approve a ZPE [export processing zone, to facilitate the export of data services] in Ceará," a market source told BNamericas.
"They took the Chinese to the government to say that if the ZPE and the energy are approved, they will invest." |
