Overview of Brazil’s Recycling Incentive Law and New Ordinance Implementation

Brazil’s Ministry of Environment and Climate Change has enacted Ordinance GM/MMA No. 1,250/2024 to regulate proposals benefiting from the Recycling Incentive Law. This ordinance aligns with Law No. 14,260/2021 and provides tax deductions to stimulate recycling projects. Eligible participants include diverse organizations; projects must have a minimum budget of R$50,000, with details submitted through the Transferegov system. Approval will lead to three years of execution authority.

On March 25, 2024, the Brazilian Ministry of Environment and Climate Change enacted Ordinance GM/MMA No. 1,250/2024 to govern the mechanics of the Incentive Mechanism for the Recycling Industry and Production Chain. This ordinance mandates that submitted proposals must align with specified objectives from Article 3 of Law No. 14,260/2021, also known as the Law of Incentives for the Recycling Industry, which is further detailed in Federal Decree No. 12,106/2024.

The Law of Incentives for the Recycling Industry offers tax deductions up to 6% for individuals and 1% for legal entities based on contributions to recycling initiatives. Eligible participants that can submit proposals include recyclable material collectors, academic and research institutions, public agencies, small businesses, among others. Notably, projects are encouraged to engage with entities involved in the collection of recyclable materials.

Proposals require comprehensive details such as the project’s objectives, the issues it addresses, alignment with the incentives’ goals, target demographics, anticipated outcomes, and timelines. The financial scope of these projects ranges from a minimum of R$50,000 to a maximum of R$8 million, submitted via the Partnership Management System (Transferegov). Once proposals are approved, execution authorization lasts up to three years.

The Environmental, Climate Change, and ESG Practice at Tauil & Chequer Advogados, in collaboration with Mayer Brown, remains available for inquiries regarding this significant regulatory update.

The Brazilian government has taken proactive measures to bolster the recycling industry through fiscal incentives, as indicated by the enactment of the Law of Incentives for the Recycling Industry. This law aims to enhance recycling efforts by providing financial support for projects that seek to promote waste management and recycling practices. Furthermore, the issuance of Ordinance GM/MMA No. 1,250/2024 regulates how these incentives are to be applied and monitored, thereby ensuring transparency and accountability in the utilization of public resources.

In conclusion, the recent enactment of Ordinance GM/MMA No. 1,250/2024 by the Brazilian Ministry of Environment and Climate Change establishes a comprehensive framework for promoting recycling initiatives through structured funding mechanisms. This regulation not only clarifies the expectations for proposal submissions but also highlights the collaboration between various stakeholders to achieve sustainability goals. The government’s fiscal incentives mark a significant step forward in fostering an environmentally responsible approach towards waste management in Brazil.

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