The Law No. 14.260 of Brazil was promulgated on December 8, 2021. It aims to promote the development of the domestic recycling industry and covers various aspects such as tax incentives, fund establishment, and project support. The details are as follows:
1. Legislative Purpose:
Based on Article 44 of Law No. 12.305 dated August 2, 2010, by formulating federal tax incentive policies and welfare measures, it aims to promote the use of recyclable and recycled materials and stimulate the development of the recycling industry supply chain.
2. Main Incentive Measures
Incentives for Recycling Projects:
Within five years after the law comes into effect, natural and legal persons taxed based on actual profits are allowed to apply for a partial income tax reduction for the expenses directly supporting recycling projects pre - approved by the Ministry of the Environment. These projects include technical training and exchanges, incubation of micro - and small enterprises, research on product life - cycle responsibilities, construction of relevant infrastructure, purchase of equipment and vehicles, establishment of commercial networks and industrial chains, enhancement of the participation of waste collectors, and development of new technologies for collecting recyclable materials.
Establishment of Investment Funds:
The establishment of the Investment Funds for Recycling Projects (ProRecicle) is authorized. The fund is in the form of a co - ownership without legal personality, and its funds are used for the recycling projects stipulated by the law. Its establishment, operation, and management are regulated by the Securities Commission after consulting the Ministry of the Environment.
3. Specific Provisions on Tax Deductions
Natural Persons:
The deduction limit is 6% of the payable income tax amount declared in the annual personal income tax adjustment declaration, and it needs to be calculated together with the deductions stipulated in Article 22 of Law No. 9.532 of December 10, 1997, and Item II of Paragraph 1 of Article 1 of Law No. 11.438 of December 29, 2006.
Legal Persons:
When calculating quarterly or annually, the deduction limit is 1% of the payable tax amount. It needs to be calculated together with the deductions stipulated in Item I of Paragraph 1 of Article 1 of Law No. 11.438 of December 29, 2006, and comply with the provisions of Paragraph 4 of Article 3 of Law No. 9.249 of December 26, 1995. In addition, legal persons cannot use this deduction amount to determine the actual profit and calculate the tax base of the Social Contribution on Net Income.
4. Supervision and Evaluation Mechanisms
Project Supervision:
The Ministry of the Environment is responsible for tracking and evaluating the projects approved and implemented with the funds of this law.
Recognition Mechanism:
The Ministry of the Environment annually issues certificates of recognition to investors, beneficiaries, and enterprises that have made outstanding contributions to achieving the goals of the law.
Establishment of a Committee:
The National Recycling Incentive Committee (CNIR) is established. It is responsible for formulating guidelines for recycling activities and tracking and evaluating the incentive measures stipulated by the law. The committee members include the Ministry of the Environment, several departments under the Ministry of Economy, the Ministry of Regional Development, the Brazilian Parliament, academia, the business community (2 representatives), and civil society (2 representatives). The Ministry of the Environment presides over the work.
5. Entry into Force and Implementation of the Law:
This law comes into force on the date of its publication and takes effect from January 1 of the following year.