en.Wedoany.com Report, On March 20, Brazilian President Lula signed a bill expanding tax relief policies for domestic chemical and petrochemical producers. The tax burden on key production raw materials is reduced by over 60%, aiming to address the pressure from rising raw material costs caused by conflicts in the Middle East.
The bill was published in the official gazette on the same day, extending the Special Tax Regime for the Chemical Industry (REIQ). The deductible proportion of social security and industrial product taxes for eligible raw materials increased from 0.73% to 5.8%. In 2026, the fiscal budget for this policy will rise from 1.1 billion reais to 3.1 billion reais. From 2026 to 2031, the total incentive scale of the special chemical tax regime and the accompanying investment incentive program is expected to reach 18 billion reais.
At the signing ceremony in São Paulo, Brazilian Vice President and Minister of Development Geraldo Alckmin stated that the timing of the policy's introduction was carefully considered. He noted that due to regional conflicts, prices for natural gas and chemical raw materials continue to rise. The federal government's reduction of the tax burden on chemical raw materials at this time aims to enhance the industry's competitiveness, attract investment and innovative cooperation, and promote improvements in energy efficiency.
The policy quickly received a positive response from the industry. Jorge Villanueva, Brazil Regional Manager of the Mexican chemical company Alpek, said, "The signed bill is a historic measure to support chemical companies, but the core still lies in its subsequent implementation." He stated that this tax relief can reduce the tax burden on basic chemical and petrochemical raw materials, promote local production, activate idle capacity, stabilize employment, and strengthen Brazil's position in the global industrial chain. This is particularly significant against the backdrop of current geopolitical tensions, economic uncertainty, supply chain pressure, and volatility in energy and raw material markets.
