Lula Enacts Taxpayer Code With Five Vetoes That Cut Relief for Compliant Payers

Overview

• Complementary Law 225 defines the habitual tax debtor and, at the federal level, sets a threshold of debts above R$15 million exceeding 100% of known assets, with penalties including loss of tax benefits, bans on public bidding and ineligibility for judicial recovery.
• Lula removed provisions that would have allowed up to 70% discounts on fines and interest, the use of tax‑loss credits to offset debts, installment plans of up to 120 months, and broader substitution of judicial guarantees such as replacing court deposits with surety bonds.
• The government justified the vetoes by citing the absence of fiscal‑impact estimates and potential violations of the Fiscal Responsibility Law and the 2026 budget guidelines.
• The law preserves compliance initiatives—Confia, Sintonia and OEA—aimed at privileging cooperative taxpayers, promoting self‑regularization and reducing litigation across tax administrations.
• An unusual rift framed the decision, with Receita Federal and business groups backing broader incentives while AGU and PGFN opposed them, and any change to the vetoes now hinges on congressional action.