Brazil's government has partially reversed controversial import tax increases that were implemented earlier this year. The decision restores zero tariffs on 105 items, including data center equipment and various industrial machinery, after receiving pushback from multiple industries.
Brazil’s federal government has walked back portions of a disputed import tax increase that took effect earlier this year, according to an announcement Friday from the Ministry of Development, Industry, Trade and Services.
The decision eliminates tariffs on products that had previously lost their tax exemptions under policies designed to encourage data center development in Brazil.
Earlier in February, the administration of President Luiz Inacio Lula da Silva implemented higher import duties on over 1,200 technology and capital goods items.
Brazil’s Independent Fiscal Institution, a budgetary oversight body connected to the Senate, had projected the tariff increases would bring in an additional 14 billion to 20 billion reais (equivalent to $2.7-3.9 billion) in government revenue during this fiscal year.
Under the latest changes, 105 products will once again be exempt from import taxes, including cooling compressors and other essential components for internal hardware temperature control, plus electrical substations that link data centers to main power grids.
Beyond data center-related equipment, the government has also restored tax exemptions for products in other sectors following appeals from various industries, such as textile manufacturing equipment, healthcare devices, and truck-mounted lifting equipment.
Brazil’s Finance Ministry had originally designed the tariff increases, arguing the policy adjustment was necessary because these imported goods contribute to an ongoing trade deficit in specific sectors and represent high levels of foreign product penetration — a pattern the ministry’s economic policy division characterized as “not merely cyclical, but structural.”
A government official, speaking without identification, explained that the tax increase was primarily motivated by budget considerations, since additional revenue from import duties — which can be implemented without legislative approval and becomes effective immediately — will be crucial for achieving the government’s fiscal objectives both this year and next.
The official noted that these revenue discussions are occurring as Brazil prepares its 2027 budget framework legislation, which must be presented to Congress by April.