Congress votes on Budget after unlocking revenue to close 2026 accounts

This Thursday, the National Congress votes on the 2026 Annual Budget Law (LOA), after the government obtains the necessary resources to meet next year’s fiscal target. Voting begins in the morning at the Mixed Budget Committee (CMO) and should advance to the Congress plenary from noon, in the last week before the parliamentary recess.

Consideration of the budget piece was only possible after the Chamber of Deputies and the Senate approved, on Wednesday, the bill that cuts part of tax incentives by 10% and increases taxation on betting houses, fintechs and interest on equity (JCP).

The collection measures were included in the report by deputy Aguinaldo Ribeiro (PP-PB) with the objective of ensuring around R$20 billion in additional revenue in 2026 — an amount considered essential by the economic team to close next year’s Budget. The project was approved at around 1 am, after a marathon of negotiations between the government and party leaders.

According to the Ministry of Finance, without the approval of these measures, the risk of the government starting 2026 with spending blocks would increase significantly. The fiscal target set for next year is a primary surplus of 0.25% of GDP, equivalent to around R$34 billion.

To make the vote viable, the rapporteur promoted changes to the original design of the tax benefit cut. The initial proposal provided for the reduction of incentives for companies with annual revenues above R$1.2 million, which generated resistance in the plenary as it affected medium-sized companies. The new text raised this ceiling to R$5 million, reducing the estimated impact of the cut from R$19.9 billion to R$17.5 billion, according to the rapporteur. The difference was compensated with increased taxes on specific sectors.

In the case of sports betting, the rate on the gross revenue of betting houses increases from 12% to 15%, in a staggered manner, with an increase of one percentage point per year until 2028. For fintechs, the text increases the CSLL of institutions currently taxed by 9% to 12% next year and 15% from 2028. The largest fintechs, which already pay 15%, will have the rate increased to 17.5% in 2026 and 20% in 2028. The tax on the distribution of interest on equity (JCP) increases from 15% to 17.5%.

The project also tightens the rules against illegal betting. Banks and fintechs that allow financial transactions related to unauthorized betting houses will become responsible for collecting the taxes due. Individuals and legal entities that advertise irregular bets may also be held responsible.

Approval was only possible after the government entered directly into political negotiations. President Luiz Inácio Lula da Silva called the President of the Chamber, Hugo Motta, and the Minister of Finance, Fernando Haddad, participated in meetings with party leaders to reinforce the need for additional revenue.

The vote on the LOA takes place two weeks after Congress approved the Budget Guidelines Law (LDO) of 2026, which expanded the Legislature’s power over the execution of the Budget in an election year. The text obliges the government to pay at least 65% of the tax amendments by June 2026 and maintained the authorization for the Executive to pursue the fiscal target floor, instead of the center, expanding the margin for spending.

With the collection unlocked in the Chamber, the government is now betting on a quick vote on the LOA to end the legislative year with the approved Budget and reduce fiscal uncertainties on the eve of 2026.