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New federal government law expands tax incentives for recycling, reduces costs, and boosts investments, jobs, and advances in waste management in Brazil
The Federal Government has enacted a new law that strengthens tax incentives aimed at recycling, consolidating a tax mechanism that had already been applied based on a decision from the Supreme Federal Court (STF) in 2021. Law 15,394, of 2026, was published without vetoes in the Official Gazette and brings greater legal certainty for companies and organizations operating in the sector.
In practice, the legislation guarantees tax benefits related to PIS/Pasep and Cofins on operations with recyclable materials. The measure tends to reduce costs, stimulate investments, and increase the competitiveness of the production chain. At the same time, it creates a more predictable environment for businesses that directly depend on the reuse of waste.
The change occurs at a strategic moment. Brazil still shows low recycling rates, reinforcing the need for more effective public policies. With the new law, the expectation is to unlock economic growth, encourage job creation, and boost the circular economy throughout the country.
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The Federal Government sanctions a new law that strengthens tax incentives for recycling and can unlock billion-dollar growth, generate jobs, and revolutionize waste management across the country.
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How the new law redefines the tax logic of recycling and expands tax incentives
The new law enacted by the Federal Government alters the tax dynamics in operations with recyclable waste. The main point is the exemption of PIS/Pasep and Cofins for suppliers of materials such as paper, glass, plastic, and metals.
Even without collecting these taxes, the buyer retains the right to tax credits. In other words, when reselling the product, they can deduct from the taxes an amount corresponding to what would have been paid in the previous stage. This model strengthens tax incentives and makes recycling more attractive from an economic standpoint.
This type of mechanism creates a positive chain effect. Companies become more interested in acquiring recycled inputs, which increases demand and enhances the entire production chain. In practice, waste is no longer seen as disposal and begins to be treated as an economic asset.
New law with tax incentives: direct impact on recycling and company costs
By enacting the new law, the Federal Government reinforces tax incentives as a tool of economic and environmental policy. Recycling, in this context, gains prominence as a solution to reduce industrial costs and improve productive efficiency.
The reduction of the tax burden can directly impact the final price of recycled products, making them more competitive compared to virgin raw materials. This tends to encourage companies from different sectors to incorporate recyclable materials into their production chains.
Among the main expected effects, the following stand out:
- Reduction of operational costs in the industry
- Increase in demand for recyclable materials
- Stimulus to innovation in sustainable processes
- Expansion of the circular economy market
This set of factors contributes to creating a more dynamic and sustainable environment, with potential for growth on a national scale.
Low recycling rate in Brazil pressures structural changes in the sector
Despite the economic potential, Brazil still faces significant challenges in the area. Data from 2024 from the National System of Basic Sanitation Information indicate that the country recycles only 1.67% of the solid waste generated.
This number highlights a scenario of underutilization of resources. A large portion of waste is still sent to landfills or improperly disposed of, generating environmental impacts and loss of economic value.
In this context, the new legislation emerges as an attempt to reverse this situation. By making recycling more financially viable, the expectation is to gradually increase reuse rates.
Furthermore, the tax incentive can help better structure the chain, reducing informality and strengthening integration among the different agents in the sector.
New law strengthens National Solid Waste Policy and expands tax incentives for recycling
The **new law** sanctioned by the **Federal Government** also directly connects with the National Solid Waste Policy (PNRS), considered one of the country’s main regulatory frameworks in the environmental area.
The rapporteur of the proposal in the Senate, Senator **Alan Rick**, highlighted that the central intention of the measure is to make the policy more effective. Deputy **Domingos Sávio**, author of the original project, contributed to building a solution that reduces economic obstacles in the sector.
By strengthening **tax incentives**, **recycling** gains more favorable conditions to grow and fulfill important PNRS objectives, such as:
- Reduce waste generation
- Encourage material reuse
- Promote social inclusion of waste pickers
- Stimulate shared responsibility
The measure, therefore, does not act in isolation, but as part of a broader sustainability strategy.
Federal Government bets on new law to boost jobs and income in the recycling chain
Another relevant point of the **Federal Government**’s initiative is its social impact. The **new law**, by strengthening **tax incentives**, can significantly increase job creation in **recycling**.
The sector is labor-intensive and involves various stages, from collection to industrial processing. With increased demand, there is a tendency for these activities to expand.
Among the segments expected to benefit are:
- Waste picker cooperatives
- Selective collection companies
- Transformation industries
- Sector logistics operators
This growth can contribute not only to the economy but also to social inclusion, especially in communities that depend on recycling as a source of income.
Legal certainty consolidates tax incentives and attracts new investments for recycling
One of the main advances brought by the legislation is the legal consolidation of **tax incentives**. Before the sanction, the model was supported by a STF decision, which generated some insecurity for companies.
Now, with the **new law** formalized by the **Federal Government**, the sector gains more stability. This is essential to attract medium and long-term investments, as well as to stimulate the expansion of existing projects.
With clearer rules, companies gain greater predictability to plan operations, expand productive capacity, and invest in technology.
This more secure environment tends to accelerate the development of recycling in the country, making the sector more competitive and structured.
Integration with tax reform will require adaptation of the new law in the coming years
The legislation also foresees future adjustments. The **tax incentives** for **recycling** established by the **Federal Government**’s **new law** will need to be adapted to the consumption tax reform, whose transition is planned until **2033**.
This process will require attention to ensure that the benefits are maintained and there are no setbacks. The integration between different public policies will be essential to preserve the advances achieved.
The expectation is that the continuity of incentives will be decisive to consolidate the growth of the sector and avoid fluctuations in the market.
What changes in practice and why this law could redefine the future of recycling in Brazil
The sanction of the new law by the Federal Government marks a significant advance in consolidating tax incentives and strengthening recycling in Brazil.
By reducing costs, increasing legal security, and stimulating investments, the measure creates real conditions to transform the sector. More than a tax change, it is an important step to reposition waste management in the country.
The expected effects go beyond the environmental aspect. The legislation can help to energize the economy, generate jobs, encourage innovation, and promote greater efficiency in resource use.
There are still challenges, especially related to low recycling rates, such as the 1.67% recorded in 2024. However, the new law establishes a more solid foundation to face these obstacles and move towards a more sustainable and competitive model.
Source: Senate Agency
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