On August 5, 2022, the National Congress overturned presidential vetoes of Federal Law No. 14,260/2021 (Recycling Incentives Law), which had been originally published in the Federal Official Gazette on December 9, 2021. It should be noted that the Recycling Incentives Law establishes tax incentives and benefits to be adopted by the federal government in relation to projects that stimulate the recycling production chain in order to encourage the use of raw materials and inputs of recyclable and recycled materials, based on provisions of Federal Law No. 12,305/2010 (National Solid Waste Policy).
With the overturning of the vetoes, the number of recycling incentives has grown beyond existing provisions such as the Investment Funds for Recycling Projects (Fundos de Investimentos para Projetos de Reciclagem - ProRecicle), whose resources will be allocated to projects established in law, and the National Commission for Recycling Incentives (Comissão Nacional de Incentivo à Reciclagem - CNIR), aimed at establishing guidelines for recycling activities as well as monitoring and evaluating incentives provided.
The projects that are now able to receive incentives are (i) training, education and technical assistance for national and international exchanges in matters involving school / academic, business, community associations and social organizations whose objective is promoting, developing or executing recycling or material reuse activities; (ii) incubation of micro-enterprises, small businesses, cooperatives and social enterprises performing recycling activities; (iii) research and studies to support actions involving shared responsibility for a product's life cycle; (iv) implementation and adaptation of physical infrastructure for micro-enterprises, small businesses, industries, cooperatives and reusable and recyclable materials collectors associations; (v) acquisition of equipment and vehicles for selective collection, reuse, processing, treatment and recycling of materials by industries, micro-enterprises, small businesses, cooperatives and reusable and recyclable materials collectors associations; (vi) organization of commerce networks and production chains with support to networks made up of micro-enterprises, small enterprises, cooperatives and associations of collectors of reusable and recyclable materials; (vii) strengthening the participation of collectors of reusable and recyclable materials in the recycling chain; and (viii) development of new technologies to aid collecting reusable and recyclable materials.
In addition, the federal government will give individuals and legal entities that are taxed based on real profit the option to deduct part of the income tax due to directly support projects previously approved by the Ministry of the Environment. For legal entities, the deduction will be limited to 1%, and for individuals, the limit will be 6%.
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