Brazil’s Congress Approves Fiscal Rules Exceptions for 2026 Budget

Brazil’s Congress has approved Complementary Bill 74/2026, creating exceptions to fiscal rules for specific tax benefits. The proposal also covers mandatory spending in the 2026 budget. It therefore amends the Fiscal Responsibility Law and Complementary Law 229/2026. The Senate approved the bill on September 3. The following day, it went to the president for approval.

Which measures qualify for fiscal rules exceptions?

The exemptions cover several measures. They include tax benefits for free-trade zones and capital goods, as well as Redata, the tax regime for data centers. In addition, the bill includes Pronon and Pronas. These programs fund cancer care and support for people with disabilities.

The list also includes corporate income tax and CSLL deductions for local reinsurers. Furthermore, it covers spending on longer paternity leave. Finally, the proposal includes voluntary transfers to municipalities with up to 65,000 residents.

Exceptions depend on budget provisions

According to the lawmakers who reported on the proposal, the aim is to align existing 2026 budget measures with fiscal rules. In this way, the bill seeks to prevent budget restrictions from blocking initiatives already in the annual spending plan.

However, the exceptions apply only under two conditions. They cover measures whose revenue losses the budget has already taken into account. Alternatively, they apply when the proposal includes measures to offset those losses.

Presidential decision is the next step

The executive branch will now review the text. The government has until September 25 to approve or veto the provisions passed by Congress. That deadline follows the constitutional time limit for this type of legislation.

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