In a significant move to enhance the competitiveness and sustainability of its chemical sector, Brazil has officially enacted the Special Program for Sustainability of the Chemical Industry (PRESIQ). President Luiz Inácio Lula da Silva signed the bill into law earlier this month, providing substantial tax incentives aimed at revitalizing the industry amid global economic pressures.

The PRESIQ legislation, formally known as Law 15,294/25, replaces and expands upon the existing Special Incentive Regime for the Chemical Industry (REIQ). It introduces annual tax credits of up to 3 billion Brazilian reais (approximately $536 million USD) from 2027 through 2031, totaling a potential 15 billion reais ($2.79 billion USD) over the five-year period. These incentives are designed to boost production capacity, encourage green investments, and counter challenges such as U.S. tariffs on chemical imports.

"This bill represents a decisive milestone for Brazil's chemical industry," said a spokesperson from the Brazilian Chemical Industry Association (Abiquim). "It will enable companies to reinvest in assets, improve utilization rates, and transition toward more sustainable practices, ensuring long-term growth and job creation."

Key provisions of the PRESIQ include tax exemptions on chemical production inputs, with a transitional phase maintaining REIQ's 0.73% tax rate through 2026. Amendments to the bill also extend benefits to related sectors, such as the automotive industry, amplifying its economic impact. However, President Lula vetoed certain clauses that would have relaxed eligibility criteria, emphasizing stricter oversight to align with fiscal responsibility.

Major players in the sector, including petrochemical giant Braskem, stand to gain significantly. Braskem estimates annual benefits of up to $380 million, which it plans to allocate toward capacity expansions and eco-friendly initiatives. The company's shares rose modestly on the São Paulo Stock Exchange following the announcement, reflecting investor optimism.

The path to enactment was marked by intense lobbying from industry stakeholders. In September 2025, chemical firms urged the Lula administration for enhanced support, initially pushing for 5 billion reais annually. The bill progressed rapidly: approved by the Senate on November 18, forwarded to the president on November 21, and signed into law on December 22-23 after incorporating amendments.

Critics, however, have raised concerns about the budgetary strain, arguing that the incentives could exacerbate Brazil's fiscal deficit. Supporters counter that the long-term economic multiplier effects—through increased exports and innovation—will outweigh the costs.

As Brazil positions itself as a leader in sustainable industrial development, the PRESIQ bill underscores the government's commitment to balancing economic growth with environmental goals. Industry experts predict it will help the sector recover from recent downturns and compete more effectively on the global stage.

For more details on the legislation, visit the official Brazilian government portal or contact Abiquim for industry insights.

Source：Presidência da República Federativa do Brasil & planalto.gov.br