Brazil's Câmara dos Deputados Approves 10% Reduction in Federal Fiscal Benefits, Project Advances to Senate

On December 16, 2025, Brazil's Câmara dos Deputados approved a significant legislative project aimed at reducing federal fiscal benefits by 10% across multiple economic sectors. This milestone in fiscal reform moves the proposal to the Senate for further consideration as part of the government’s efforts to enhance transparency, oversight, and efficiency in tax policy.

The law explicitly targets reductions in tax incentives related to federal contributions such as PIS/Pasep, Cofins, IPI, IRPJ, and CSLL. Importantly, certain sectors are exempt from these cuts, including basic food items and non-profit organizations, ensuring social responsibility initiatives remain intact. Programs such as the Minha Casa, Minha Vida housing initiative, ProUni educational program, and the Zona Franca de Manaus free trade zone will also be preserved.

Hugo Motta, president of the Câmara, hailed the approval as a crucial step toward tax justice and sustainable public spending. He emphasized that Brazil had previously followed an unsustainable economic trajectory by indiscriminately granting fiscal benefits without adequate oversight. Motta highlighted the introduction of a five-year evaluation period for tax incentives, a mechanism that will automatically terminate benefits failing to deliver results, effectively ending ‘‘eternal privileges.’’

The law authorizes the Executive Power with decision-making authority over the reductions, reflecting a strategic approach to budget impact management. Additionally, the bill modernizes taxation in emerging sectors by proposing a gradual increase in taxes for online betting services—from 12% to 15% by 2028—and fintech companies, with their CSLL increasing from 15% to 20% over the same period.

Aguinaldo Ribeiro, the bill’s rapporteur, criticized the previous practice of unjustified and indiscriminate granting of fiscal benefits, stating, "Using fiscal benefits as an economic incentive is often the most costly, least effective, and least transparent tool, benefiting private interests without generating social return." The reforms aim to rectify these issues, promoting fairness and fiscal responsibility in Brazil’s tax system.

This legislative development reflects growing efforts within Brazilian politics to reform federal fiscal policy, enhance transparency, and strengthen the oversight of tax incentives to balance economic growth with social equity. As the project now awaits Senate deliberation, stakeholders anticipate further debate on the fiscal trajectory of the nation.