Recycling is given incentives and generating entities are enabled in the Reverse Logistics system
In summary
New rules have been published regulating: (i) the tax incentive for the recycling production chain, with the aim of encouraging the use of raw materials (Decree No. 12.106/2024) and; (ii) the criteria for the qualification of management entities and the parameters to be observed by them in the performance of their duties, within the scope of reverse logistics systems for packaging in general (Ordinance GM/MMA No. 1.102/2024).
More details
On July 11, 2024, Decree No. 12.106/2024 was published, regulating the tax incentive for the recycling production chain established by Law No. 14.260/2024. According to the regulation, individuals and companies taxed on a real profit basis will be able to deduct part of their income tax as a result of direct support for projects previously approved by the Ministry of the Environment and Climate Change (MMA), aimed at:
a) Capacity building, training and technical advice, including the promotion of national and international exchanges, for schools, academia, businesses, community associations and social organizations whose purpose is to promote, develop, implement or foster recycling or reuse of materials;
b) Incubation of micro-enterprises, small businesses, cooperatives and social solidarity enterprises involved in recycling activities;
c) Research and studies to support actions involving shared responsibility for the life cycle of products;
d) Implementation and adaptation of the physical infrastructure of micro-enterprises, small businesses, industries, cooperatives and associations of collectors of reusable and recyclable materials;
e) Acquisition of equipment and vehicles for the selective collection, reuse, processing, treatment and recycling of materials by industries, micro-enterprises, small businesses, cooperatives and associations of collectors of reusable and recyclable materials;
f) Organization and support for marketing networks and production chains, made up of micro-enterprises, small businesses, cooperatives and associations of collectors of reusable and recyclable materials;
g) Strengthening the participation of collectors of reusable and recyclable materials in recycling chains; and
h) Development of new technologies to add value to the work of collecting reusable and recyclable materials.
The deduction will be limited to 6% (six percent) of the income tax due for individuals; and 1% (one percent) of the tax due for each quarterly or annual calculation period for legal entities, noting that the amount cannot be deducted for the purposes of determining actual profit and the basis for calculating the Social Contribution on Net Profit.
In addition, on July 15, 2024, Ordinance GM/MMA No. 1.102/2024 was published, regulating, within the scope of reverse logistics systems for packaging in general at a national level, the criteria for the qualification of management entities and the parameters to be observed by them in the performance of their duties.
The cumulative criteria laid down in the regulations for the qualification of management entities in the collective model, in short, are:
i. To be a legal entity, with its own legal personality, responsible for structuring, implementing and operating the reverse logistics system for products and packaging;
ii. Have a valid instrument designating it as a managing body;
iii. Have a national presence in reverse logistics for packaging in general;
iv. Submit the documents relating to the qualifications of the entity’s technical manager and, where appropriate, a copy of their mandate;
v. Demonstrate the technical and operational capacity to structure, implement and operate the entire reverse logistics system for products and packaging;
vi. Submit a declaration of awareness of the requirements for proving the traceability of electronic invoices and demonstrating that the masses of recyclable materials have been effectively returned to the manufacturer or recycler, as well as the need for an annual audit of the results by a results verifier;
vii. Have or contract an electronic information system equipped with technology to capture anonymized information from the business sector (black box) and obtain, confidentially and securely, independently of the result verifier, the quantity of masses of products or packaging made available on the market and returned to the production sector;
ix. Submit a declaration that you are aware of all the information and conditions necessary to fulfill your obligations as a management entity.
There are also general parameters of action that must be observed by the management entity when carrying out its activity.
