Tax Pills: Agriculture – What Changes for Those Who Plant?

Brazil is the world's largest exporter of soybeans and the second largest exporter of corn. The agricultural supply chain moves hundreds of billions of reais annually and is the main driver of Brazilian exports. The tax reform addresses this chain with specific rules—and the practical result is a significant simplification compared to the current system, with points of attention that cannot be ignored.

The raw product: 60% reduction

All grains, fruits, vegetables, or any plant product that comes from the field without industrial processing benefits from a 60% reduction in IBS and CBS rates, according to article 212 of the regulations. For producers who sell soybeans directly from the harvest, corn to trading companies, oranges to juice processors, or coffee beans to processors—the product is considered unprocessed, and the reduced rate applies. The regulation clearly specifies that products subjected only to drying, cleaning, threshing, pitting, freezing, or cooling—when these procedures are intended solely for transport, storage, or display for sale—do not lose their unprocessed status.

Grain destined for industrial processing: tax exemption

When raw materials go directly to a taxpayer under the regular tax regime who will process them—such as soybean crushing, corn milling, or wheat processing—the payment of IBS (Brazilian VAT) and CBS (Brazilian VAT) is suspended during this operation, according to Article 99 of the IBS Regulations. The tax is only levied on the final processed product when it is released to the market. This avoids the accumulation of tax burden in the intermediate stages of the supply chain and significantly improves the cash flow of trading companies and processing industries.

Cooperative or trading company that buys from individual producers.

When a non-taxpaying individual producer sells their grain to a cooperative or trading company, the buyer accumulates a presumed credit from the IBS and CBS taxes, calculated using a formula defined annually. This credit is included in the cooperative's or trading company's calculations as if it had been paid by the producer throughout their production chain. In practice, this makes the non-taxpaying producer's product commercially equivalent to that of a taxpayer who generates real credit—a significant change from the current system, where this mechanism did not exist at the federal level.

Environmental services and low-carbon agriculture

Article 212, paragraph 3, of the IBS Regulation introduces a significant innovation: for the purposes of the 60% reduction, the supply of forest products also includes environmental services related to the conservation or recovery of native vegetation, even if provided through the sustainable management of agricultural, agroforestry, and agrosilvopastoral systems. This opens a tax loophole for producers who work with carbon credits and environmental services within these production methods. Specific regulations for this classification are still under development, but the legislator's signal is clear: sustainable agriculture will receive favorable treatment under the reform.

For Brazilian farmers, tax reform represents a concrete opportunity for simplification and reduction of the tax burden in the primary stages of production. The challenge lies in commercial contracts: cooperatives, trading companies, and industries will need to adapt their purchasing mechanisms to correctly capture the presumed credit and ensure that it is reflected in the prices paid to the producer.

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