Incentive to the recycling industry and production chain is regulated

In brief

On December 16, 2024, the Brazilian Ministry of the Environment and Climate Change (MMA, in Portuguese) issued Ordinance GM/MMA No. 1,250/2024, which regulated and established the procedures for the implementation of the Recycling Industry and Production Chain Incentive mechanism.

More details

Following the enactment of Federal Law No. 14,260/2021 and its regulation (Federal Decree No. 12,106/2024), which established tax incentives for the recycling industry (see more details here), the MMA edited Ordinance No. 1,250/2024. The new ordinance established the procedures for the submission, analysis, approval, monitoring, accountability, and evaluation of proposals and projects within the Recycling Industry and Production Chain Incentive mechanism.

According to the new ordinance, proposals for recycling projects and programs may be submitted to the MMA for validation by: (i) recyclable material collectors, (ii) teaching, research, science, and technology institutions, (iii) building condominiums, (iv) civil society organizations of public interest (OSCIP, in Portuguese), (v) civil society organizations (OSC, in Portuguese), (vi) public agencies and (vii) micro and small companies.

Upon submission and validation of the projects by the MMA, sponsors – defined as income tax payers who support recycling initiatives – could be eligible to provide financial incentives for approved projects. While supporting the initiatives, sponsors would also be allowed for a limited tax deduction of up to 6% of individual income tax or 1% of corporate income tax.

The recently enacted ordinance specifies the procedures for the presentation, admissibility, technical analysis, funding, execution, and evaluation of projects within the recycling production chain. Furthermore, the ordinance stipulates that these projects must fulfill at least one of the objectives outlined to promote recycling activities under Law No. 14,260/2021, including: (i) capacity building, training, and technical assistance related to recycling activities, (ii) incubation of micro-enterprises, small businesses, cooperatives, and entities engaged in recycling activities, (iii) research and studies to support actions that involve shared responsibility for the life cycle of products, among others.

According to Ordinance No. 1,250/2024, the proposals and projects submitted shall not be designed to fulfill obligations related to take-back requirements systems foreseen in Article 33 of the National Solid Waste Policy (Federal Law No. 12,305/2010). Nonetheless, the ordinance allows the allocation of funds for projects that demonstrate additionality in relation to take-back obligations.

The new ordinance entered into force in the date of its publication.