President Luiz Inácio Lula da Silva sanctioned on December 26, 2025, the law—previously approved by Congress on December 17—cutting 10% of federal fiscal incentives and raising taxes on betting houses, fintechs, and interest on own capital (JCP), projecting R$20 billion in 2026 revenue. However, he vetoed a congressional 'jabuti' clause revalidating nearly R$2 billion in parliamentary amendments from 2019-2023, citing unconstitutionality per STF rulings.
Following swift approval by the Chamber and Senate on December 17 (as reported in prior coverage), President Lula enacted the core measures to bolster the 2026 fiscal framework. The law trims presumed tax benefits across PIS/Pasep, Cofins, IRPJ, CSLL, and others by 10% for larger firms, while hiking rates on fixed-odds bets (to 15% by 2028), JCP withholding (to 17.5%), and CSLL for fintechs (to 20% from 2028).
Key action was vetoing the unrelated clause allowing payment of outstanding 'relator amendments'—dubbed the 'secret budget'—canceled post-STF's 2022 unconstitutionality ruling. Valued at ~R$2 billion (part of R$2.97 billion canceled in 2024), it would have extended deadlines to 2026. STF Justice Flávio Dino's recent decision (Mandamus 40.684/DF) deemed revalidation illegal, lacking budgetary basis.
Lula also nixed stricter rules for subsidized loans, arguing harm to social policies. Congress may override the veto. This caps a contentious process balancing fiscal adjustment with sectoral pushback.
