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Newly enacted law establishes incentives to strengthen recycling production chain

13/12/2021

Briefly

On 8 December 2021, the president of Brazil issued vetoes and partially sanctioned Bill No. 6.545 of 2019 (Federal Law No. 14.260, published in the Official Gazzette on 9 December 2021). With the presidential vetoes, the federal law lays down the constitution for investment funds for recycling projects (“ProRecicle“) as an incentive to the recycling industry.

Further details

The bill aims to establish tax incentives and benefits for projects that promote the recycling production chain, and instigate the use of raw materials and input of recyclable and recycled materials, in line with the National Solid Waste Policy (Federal Law No. 12.305/2010).

The presidential sanction was partial, and only vetoed important articles for supposed unconstitutionality and contrariety to the public interest, after a hearing at the Ministry of Economy. For instance, items on (i) encouraging recycling projects and (ii) providing for donations to the Support Fund for Actions Focused on Recycling (“Favorecicle“) were vetoed. Both incentives were previously considered necessary to implement the law’s objectives.

As a result, incentives may only occur through ProRecicle, which allocates resources to the relevant projects according to the regulations of the CVM – Securities Commission in Brazil, following a hearing at the Ministry of Environment.

The sanction also vetoed articles describing incentives for recycling projects and Favorecicle, as well as articles setting forth income tax deduction and financial transaction tax exemptions in operations with ProRecicle funds.

Finally, the Ministry of Environment will grant certificates of recognition annually to investors, beneficiaries and companies that have contributed to achieving the highlighted objectives. The National Commission for Recycling Incentive (CNIR) will be responsible for establishing mandatory guidelines as well as monitoring and evaluating incentives. The CNIR consists of two representatives from the business sector and two representatives from civil society. Our Environment, Consumer and Sustainability team is available to provide further clarification on the subject.

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