By Brazil Stock Guide – Brazil’s Senate approved on Tuesday the bill that extends and restructures federal subsidies for the chemical industry, creating the Presiq program as the sector’s main industrial policy instrument through 2031. Lawmakers upheld the full text previously passed by the Lower House and rejected the only amendment presented on the floor. The decision preserves the existing REIQ regime through 2026 and ensures a defined transition to Presiq starting in 2027, giving the sector a multi-year subsidy horizon.
The new framework introduces two forms of financial support structured as refundable or compensable tax credits. The industrial modality grants credits of up to 6% on petrochemical feedstock purchases, capped at R$2.5 billion per year. The investment modality allows credits of up to 3% of gross revenue for expansion and modernization projects, limited to R$500 million annually. Both credits may be offset against federal taxes or reimbursed in cash, underscoring the direct fiscal nature of the subsidies programmed for 2027–2031.
In parallel, the bill updates REIQ rules for 2025 and 2026 — adjusting PIS/Cofins rates and maintaining transitional eligibility conditions — before Presiq becomes the core of Brazil’s industrial policy for chemicals. The transition comes as the sector operates at only 64% of installed capacity, its lowest level since 1990, pressured by rising imports, high feedstock costs and global protectionist measures. The new subsidy architecture may offer targeted relief to companies facing significant competitiveness challenges, including Braskem, which has been dealing with operational pressures and could use Presiq credits to renew assets, replace technologies and advance energy-efficiency programs.
The Senate vote also demonstrated broad political alignment around Brazil’s neo-industrialization agenda. The chamber rejected an amendment that sought to modify eligibility rules, broaden beneficiary segments and alter feedstock provisions, maintaining the text negotiated with the Lower House and aligned with fiscal-responsibility requirements. With the bill now headed to President Luiz Inácio Lula da Silva for sanction, the chemical sector expects a smooth transition from the current REIQ structure to the new Presiq regime and a guaranteed subsidy window extending through 2031.