Brazilian Business Entities Oppose 'Moretti Plan' Tax Compensation Limits
Industry groups argue proposed fiscal adjustments unfairly restrict legitimate tax credit usage.
1Fiscal Proposal Sparks Backlash
Business entities are mobilizing against a new government proposal within the 'Moretti Plan' that restricts tax compensation. The measure, currently under analysis by the National Congress, aims to grant the executive branch broader powers to block budget expenses when revenue shortfalls threaten fiscal targets, potentially impacting corporate tax credit utilization.
2Mechanism of the Adjustment
The proposal allows the economic team to trigger a revenue-side effort if spending freezes are enacted. This mechanism could effectively double the minimum adjustment of R$ 12.8 billion by limiting the compensation of PIS/Cofins credits. Companies argue this creates an abrupt burden on the productive sector and violates non-cumulativity principles.
3Historical Context of Opposition
This is not the first attempt to restrict these credits; a similar measure was rejected by the National Congress in 2024. Then-president Rodrigo Pacheco returned the original provisional measure to the executive branch, which critics had dubbed the 'end of the world' decree due to its perceived negative economic impact.
4Broad Industry Coalition Formed
A manifesto signed by 57 entities, including the CNA, Fiesp, and various agricultural associations, opposes the move. These groups argue that tax credits are not government money but rather overpaid taxes that the law mandates be returned. They contend that the government is treating private assets as if they were public funds.
5Impact on Exporting Sectors
The credits in question often arise from export activities and zero-rated agricultural products, which are constitutionally protected from certain tax burdens. Entities emphasize that these credits are a structural feature of the tax system, not a fiscal favor, designed to remove residual tax costs from complex production chains across the country.
6Reform Integration Concerns
The proposal creates uncertainty regarding the upcoming tax reform. Legislation dictates that existing PIS and Cofins credit balances will be eligible for compensation against the new CBS tax starting January 1, 2027. Businesses fear that limiting these compensations now sets a dangerous precedent for future restrictions on the new tax system.
7Legislative Demands and Amendments
Signatories are formally requesting that the National Congress remove Article 6-F from the proposed bill PLP 299/2026. They advocate for the preservation of the credit utilization regime established in Law Complementary 214/2025. Several amendments have already been submitted to the legislature to strike the controversial section from the government's fiscal package.
8Broader Economic Implications
The conflict highlights the tension between the government's need to meet fiscal goals and the private sector's demand for regulatory stability. By attempting to bypass parliamentary scrutiny through infralegal acts, the executive branch faces significant resistance from influential industry federations, which could complicate the passage of the broader fiscal adjustment plan.