Sustainability has ceased to be merely an environmental issue and has become a strategic matter for companies, governments, and civil society organizations.
Increasingly, consumers, investors, and partners value institutions committed to sustainable practices and generating a positive impact on society.
In this context, a tool that is still little known is gaining relevance: the Recycling Incentive Law, created to stimulate investments in projects focused on recycling, circular economy, reverse logistics, and productive inclusion.
In addition to contributing to environmental preservation, the law allows companies and individuals to allocate a portion of their income tax to initiatives that promote sustainable development throughout the country.
What is the Recycling Law?
Law No. 14,260, of December 8, 2021, established tax incentives for recycling projects approved by the Federal Government.
Its goal is to increase investments in initiatives that contribute to:
• Reduction of solid waste;
• Strengthening of selective collection;
• Support for waste picker cooperatives;
• Reverse logistics;
• Environmental education;
• Innovation in recycling;
• Circular economy.
The legislation seeks to strengthen the entire recycling production chain and encourage more sustainable practices in companies and communities.
How does the tax incentive work?
The mechanism is similar to that used in other well-known incentive laws, such as the Rouanet Law and the Sports Incentive Law.
Companies taxed on actual profit and individuals who file their income tax using the full form can allocate part of the tax owed to previously approved recycling projects.
In practice, this means that:
• The funds would already be paid to the Federal Government;
• The taxpayer chooses where part of this amount will be applied;
• The project receives funding to carry out actions of public interest.
In other words, it's a way of transforming taxes into environmental and social impact.
Who can benefit from the Recycling Law?
Individuals
Individuals can deduct up to 6% of their income tax due, respecting the overall limits set for federal tax incentives.
Legal entities
Companies taxed on actual profit can deduct up to 1% of their income tax due for projects that qualify under the Recycling Law. This deduction does not increase the company's tax burden.
Which projects are eligible for funding?
The legislation covers different types of initiatives. Among them:
- Selective waste collection.
- Projects aimed at expanding and improving the selective collection of waste.
- Waste picker cooperatives.
- Support for the structuring, training, and strengthening of cooperatives and associations of recyclable material collectors.
- Reverse logistics.
- Projects that promote the return of products and packaging to the production cycle.
- Environmental education.
- Educational initiatives aimed at raising awareness about responsible consumption, proper disposal, and sustainability.
- Innovation and technology.
- Innovative solutions for waste reuse, recycling, and the circular economy.
What is a circular economy?
One of the most important concepts linked to the Recycling Law is the circular economy. Unlike the traditional model of production and consumption — based on extracting, producing, consuming, and discarding — the circular economy seeks to keep materials and resources in use for as long as possible. This means:
• Reduce waste;
• Reuse materials;
• Recycle products;
• Repurpose resources.
The goal is to reduce pressure on natural resources and make production processes more sustainable.
Recycling Law and ESG
In recent years, ESG has become one of the world's leading corporate agendas. The acronym represents three fundamental pillars:
- Environmental: Recycling reduces waste generation, encourages the reuse of materials, and contributes to environmental preservation.
- Social: many projects supported by the law promote income generation, productive inclusion, and the strengthening of waste picker cooperatives.
- Governance: the allocated resources go through approval, monitoring, and accountability processes, ensuring transparency and control.
Therefore, the Recycling Law is one of the few instruments that simultaneously contribute to the three pillars of ESG.
Why is recycling so important for Brazil?
According to data from industry organizations, millions of tons of waste are still improperly disposed of every year in Brazil. At the same time, thousands of families depend on recycling as a source of income. Investing in recycling means:
• Reduce environmental impacts;
• Generate jobs;
• Strengthen cooperatives;
• Stimulate innovation;
• Improve urban waste management.
In other words, it's an environmental, economic, and social issue.
How does the Recycling Law compare to other tax incentives?
Brazil has several mechanisms that allow for the transformation of part of the Income Tax into social investment.
| INCENTIVE | AREA |
| Rouanet Law | Culture |
| Sports Incentive Law | Sport |
| PRONON | Oncology |
| PRONAS/PCD | People with Disabilities |
| Children and Adolescents Fund | Childhood and Youth |
| Elderly Fund | Aging |
| Recycling Law | Sustainability and Environment |
They all share the same principle: directing a portion of taxes towards projects of public interest.
The future of sustainability lies in recycling
The transition to more sustainable economic models will be one of the great challenges of the coming decades. Governments, businesses, and social organizations will need to work together to reduce environmental impacts and expand responsible practices.
In this context, the Recycling Law emerges as an important tool to stimulate investment, strengthen the circular economy, and accelerate the construction of a more sustainable future.
Conclusion
The Recycling Law represents an opportunity for companies and citizens to contribute directly to environmental sustainability and the social development of the country. By allowing a portion of income tax to be allocated to recycling projects, the legislation strengthens initiatives that generate a positive impact, promote productive inclusion, and help build more sustainable cities.
More than just a tax benefit, it is an instrument capable of transforming tax revenue into concrete actions for the environment and for society.
Frequently Asked Questions
What is the Recycling Law?
It is federal legislation that allows a portion of income tax to be allocated to recycling projects approved by the Federal Government.
Who can use the incentive?
Individuals who file using the full tax return form and companies taxed on actual profit.
Does the company pay more tax by using the law?
No. It redirects a portion of the tax that would already be paid to the Federal Government.
Which projects are eligible for funding?
Projects related to recycling, selective collection, reverse logistics, environmental education, waste picker cooperatives, and the circular economy.
Does the Recycling Law contribute to ESG?
Yes. It generates environmental, social, and governance impacts, strengthening the three pillars of ESG.