‘What we cut was waste’, says Motta about PL that reduces tax incentives

The president of the Chamber of Deputies, Hugo Motta (Republicanos-PB), celebrated the approval, in the early hours of this Wednesday, of the project that establishes a 10% reduction in tax benefits, and stated that the measure guarantees the cutting of “waste”, and puts an end to the “blank check”.

“What we cut was waste. More than cutting, we ended up with a ‘blank check’. From now on, any tax incentive will be valid for a maximum of 5 years and have clear performance targets. If it doesn’t deliver results for the country, the benefit ends”, he said during a speech in the Plenary.

The project was approved in the early hours of Wednesday. There were 310 votes in favor and 88 against. The text goes to the Senate, where it should be voted on this Wednesday. The text also foresees an increase in taxation of bets, fintechs and interest on equity (JCP).

Regarding these measures, Motta stated that they were necessary in the face of “outdated taxation”.

“In a gesture of equality, we brought Fintechs and payment institutions into the game, gradually increasing their contribution to 15%,” said Motta. “Finally, we have brought order to the betting sector. The ‘Bets’ market cannot be a lawless land”, he added.

The text was approved in the plenary session around 1 am this Wednesday, after intense government negotiation for the measure, which according to Minister Fernando Haddad, should close the accounts for the 2026 Budget.

The collection measures for increased taxation were included in the text after a change in the cut in benefits granted to companies based on presumed profits. The original proposal envisaged a reduction in incentives for companies with annual revenues above R$1.2 million, which generated concern among parliamentarians about the impact on medium-sized companies. The new text presented provides for a ceiling of R$5 million. As a result, the impact of the incentive cuts falls from R$19.9 billion to R$17.5 billion, according to Ribeiro.

Political negotiations

The presentation of the text took place after intense negotiations by the government, which went into the field yesterday to seek approval, by the National Congress, of the bill. President Luiz Inácio Lula da Silva called the president of the Chamber, Hugo Motta (Republicanos-PB), and the Minister of Finance, Fernando Haddad, participated in a meeting with House leaders. The head of the economic team highlighted that the department needs R$20 billion to close the 2026 Budget, the amount of revenue predicted with the original version of the text.

Negotiations were progressing last night to reduce some points from the government’s original proposal, but compensating with the inclusion of an increase in the taxation of bets and fintechs and, possibly, an increase in the tax on the distribution of interest on equity (JCP) by companies to their shareholders.

“The volume of resources needed to close the budget piece is in the order of R$20 billion,” Haddad told journalists as he left the Ministry of Finance, early yesterday evening.

The economic team is trying to vote on next year’s budget this week, the last week before the parliamentary recess. The project under discussion guarantees the resources to reach next year’s target, which is a surplus of 0.25% of GDP — around R$34 billion. Without these resources, the risk of the government starting the year having to contain spending would increase significantly. The government was playing with the risk of cutting parliamentary amendments to try to convince deputies to move forward with the measures.

What changes

In the case of bets, the tax applied to the gross revenue of bookmakers will increase from the current 12% to 15%, linearly, with 1 point per year, until 2028.

For fintechs, the text presented in the Chamber increases the rate of those subject to the 9% CSLL rate to 12% next year and 15% from 2028. Larger fintechs, with a rate of 15%, would increase to 17.5% in 2026 and 20% in 2028.

The tax on the distribution of interest on equity (JCP) by companies to their shareholders — it is a form of profit delivery used mainly by the financial sector — rises from the current 15% to 17.5%.

The project also defines that banks and fintechs that allow transactions related to unregulated betting houses are responsible for collecting taxes on illegal bets. Individuals and legal entities that advertise unauthorized bets will also be held responsible.

The project rapporteur stated that the “indiscriminate granting” of tax benefits corrodes the tax system, making it unequal, unfair and inefficient.

“We are not opposed to policies to stimulate strategic sectors of the economy. However, the use of tax benefits for this purpose tends to be the most expensive, least effective and least transparent tool and, in many cases, only serves to benefit private interests without generating social returns”, he said.