The regulatory scenario for Brazil is cloudy at the moment. Sometimes it feels like industry colleagues who are very invested in the process become overly optimistic about the developments.
Recently, the bill in discussion in the legislative houses in Brazil had the urgent status removed, that is, it is no longer a priority with a clear deadline. When this happened, there was a promise that it would be voted in the Brazilian senate presently.
However, the removal of the urgency status was a clear sign that things aren’t as clear and easy to understand as foreign colleagues may suspect.
Now we’re ending another week without advancements, and there’s another forecasted voting session in the Brazilian senator next Tuesday.
But promises and the postponing of the voting of the bill at hand have been mounting for a while, and even when it is perhaps an approved bill, the bill will have to pass again in the lower house due to significant changes in the legislation, including the change of taxation to a more palatable base 12% income tax.
After new legislation eventually comes into force, Brazil will have to see the creation and the operation of a regulatory body, the imposition of potential laws that determine a minimum number of Brazilian executives and local capital, as well as the process of actual tax collection.
When these things eventually happen, then the industry will respond positively or negatively.
But Brazil is about to start a year of municipal elections, which are as important as mid-term elections here to some degree, even if not as important as the ones in America, they consume the energy of the political world strongly.
2025 may be the only full year that may see actual regulatory changes in Brazil until the Brazilians vote once again in a presidential election which can change everything again.
I still believe that the grey market will linger long into 2024, at least during a good part of S1 2024 in a best-case scenario, and throughout the Lula administration until Jan 1st, 2027 in a worst-case scenario, which is not a very unlikely one.
