Lula Signs Law to Cut Tax Breaks and Raise Levies on Bets and Fintechs, Vetoes R$1.9 Billion Amendments Revival

Overview

• The law imposes a linear 10% reduction in federal tax incentives and sets a trigger to curb new benefits when they exceed 2% of GDP, with new transparency and monitoring requirements for proposals.
• Lula vetoed a provision that would have revalidated unpaid congressional amendments estimated at about R$1.9 billion, citing a precautionary ruling by Supreme Court Justice Flávio Dino tied to the unconstitutional ‘orçamento secreto’.
• Congress will review the presidential veto in a joint session after the parliamentary recess, when lawmakers can sustain or overturn it.
• Taxation on betting companies will increase from 12% to 15% on gross revenue by 2028, with 1% of receipts directed to social security in 2026, rising to 3% thereafter.
• Fintechs face higher CSLL rates—moving from 9% to 12% in 2026 and to 15% in 2028, with larger firms rising to 17.5% in 2026 and 20% in 2028—while the tax on interest on own capital distributions increases from 15% to 17.5%, measures the government counts on to help reach the 2026 surplus target of R$34.3 billion.