On Monday, the Brazilian Chamber of Deputies approved an expedited legislative process for a bill that aims to temporarily lower the PIS/Pasep and Cofins tax rates for the chemical and petrochemical industries, with Braskem being the main beneficiary. This tax reduction, set to take effect in 2026, is estimated to cost the government R$ 3.1 billion, of which R$ 1.1 billion was already accounted for in this year's federal budget. The balance will be covered by revenue from cuts in other fiscal benefits, suggesting a strategic shift in government revenue allocation.

The urgent regime, which allows bills to bypass committee reviews and go straight to the plenary, was supported by 298 deputies while 132 opposed it, indicating a significant level of legislative backing for the project. This streamlined legislative approach underscores the urgency that lawmakers attribute to the proposal, which the government has deemed critical for fostering growth in the chemical sector. Additionally, the new concession won't be limited by previous amendments to differentiated rates that came into effect earlier this year.

This tax reduction initiative raises questions about fiscal sustainability and the potential implications for broader industrial support policies. While it may boost Braskem's competitiveness within the chemical and petrochemical markets, it could also lead to debates on the priorities of the Brazilian government regarding tax exemptions and their impact on public finances. The project reflects ongoing discussions around the balance between stimulating economic growth and maintaining fiscal responsibility through careful budget management.