The incentives promoted by the stimulus regime for the data center industry in Brazil should place Brazil at a level of competitiveness similar to the United States, where the world’s main cloud companies are headquartered. For Alexandre Maiorial, president of Oracle Brazil, the program makes the country a potential expansion geography for the company’s global use.
According to the company’s expectations, Redata — as the Special Taxation Regime for Datacenter Services was called — should be approved in three months. The Provisional Measure that established tax incentives for the sector, published in September, provides for exemption from federal taxes for the acquisition of technology equipment that supports the storage and processing infrastructure behind data centers.
“With Redata coming out, we have a significant reduction in several taxes. Normally, we have more than 50% in taxes”, says Maioral in an interview with InfoMoney at the Oracle AI World event. It also adds stimulus measures involving ICMS in states such as Rio de Janeiro, São Paulo, Paraná and Rio Grande do Sul.
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According to the National Telecommunications Agency (Anatel), the effective tax rate on information technology equipment should fall from 52% to 18% with the new regime. GPUs, processors like those manufactured by Nvidia, are some of the items with the greatest impact on data center development costs.
Maioral states that the operationalization of the regime — final definitions on counterparts must still be elaborated in the technical area — positions Brazil at the level of regions such as the American city of Phoenix, in the state of Arizona, where Oracle (ORLC34) maintains one of its data centers.
“With the approval of Redata, we begin to have a business with margins that are competitive with any other region in the world”, says the executive. “The company is starting to really look at Brazil as something that will have important financial returns, because it didn’t before.”
On the government side, projections are that Redata will attract around R$2 trillion in investments in the coming years. For Maioral, the number may even be low “because it does not only cover the Brazil region, but it is possible to serve customers globally” from the country.
Last week, Oracle announced two new data centers in Brazil, in São Paulo and Vinhedo, to serve applications from its NetSuit corporate services platform. According to Maioral, the investment did not foresee the approval of Redata and should already be done.
Read the edited interview below.
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InfoMoney: Was the expansion of Oracle’s infrastructure in Brazil made possible by the signals already received from the government that Redata would be implemented?
Alexandre Maioral: In fact, these expansions happened because we really believed in Brazil’s potential. Through Redata, we ended up being called upon to understand the challenges that a technology player has in relation to fees.
Our global rates team has a Brazilian person who participated in the discussion to show all the challenges we have, which helped the government to really understand how this was an impediment.
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So, somehow, we didn’t believe and bet on Brazil. In fact, we bet and managed to convince the government to have visibility on how Brazil was not a competitive region for any player, not just Oracle.
IM: And Brazil is starting to catch up with which regions in terms of competitiveness?
AM: With Redata coming out, we have a significant reduction in several taxes. Normally, the rate we have is greater than 50%. With Redata and with some states looking at ICMS, exempting ICMS, we are on par with tariffs in the United States, in Phoenix, Texas. Then it becomes really competitive.
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The corporation looks at it very favorably, because Brazil really becomes a location, a possible geography for the expansion of several data centers. Again, not a data center for local use only, but for global use.
IM: For which applications? Is it possible to do AI training in Brazil, for example?
AM: Anything is possible, sending GPUs to Brazil would be unfeasible to have much use due to taxes. Regarding tariffs, we have the same as the Stargate project [iniciativa da OpenAI para investir US$ 500 bilhões em infraestrutura de IA]for example. Remembering that there are several clients that are global, but have operations close to Latin America.
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States are also racing with ICMS. In São Paulo, the [governador] Tarcisio [de Freitas] has already approved the proposal to eliminate ICMS for technology players. It hasn’t become a Bill yet, but it’s already opened, it’s official.
São Paulo, the state of Rio de Janeiro, which already has some different tariffs as well, become great hubs of possibilities. The government of Paraná is talking about this, the government of Rio Grande do Sul is talking about it — all governments are talking about it.
IM: Do you calculate what type of gain with the approval of the new regime?
AM: The fact is this: nowadays, most of the investments we make in the region are just that: investments.
The region is important and we always wanted to be here. We needed to be here — for latency, for technology reasons, to be closer to customers and for the market. But, as is the case for all players, there is a lot of investment to be in Brazil, it was not competitive.
IM: Are you continuing your conversations with the government?
AM: Now Redata has the technical area for operationalization. We always remain available to answer any questions about how imports and construction work in these regions in Brazil.
IM: The government projects up to R$2 trillion in investments attracted in data centers over the next decade.
AM: I believe it should be more than that, even. If Redata materializes the way we imagine it should, this investment would be greater. Again, it does not only cover the Brazil region, but it is possible to serve customers globally throughout Brazil.
IM: And how much of this projected investment should come from Oracle?
AM: I don’t know. The corporation is waiting for what will really happen. If that happens, we can establish this incorporation. We know that there is a lot of interest because there are global clients who ask to be close to the Latin American region due to the operations they maintain there.
IM: Will Oracle be able to bring enough GPUs to Brazil with the expected expansion of the Redata appeal? Suppliers like Nvidia and AMD have one to deliver. Would it be a problem for you?
AM: No, it will be the same problem that we have globally. Demand will naturally increase. Here, Oracle, with its partnership with Nvidia, receives GPUs earlier than other players. But it will take the same time as if we were in Texas.
*The reporter traveled to Oracle AI World at the invitation of Oracle.
