Tax Pills: Agricultural Inputs – Does the Reform Change the Cost of Production?

The cost of inputs is one of the biggest determinants of agribusiness profitability. Fertilizers, seeds, pesticides, veterinary medicines—these items represent a significant portion of the production cost. Tax reform directly affects this cost structure, and the net effect depends on the specific classification of each product.

The list in Annex IX of Supplementary Law No. 214/2025

Complementary Law No. 214/2025 created a specific annex — Annex IX — with a list of agricultural and aquaculture inputs that are entitled to a 60% reduction in the IBS and CBS rates. This list includes fertilizers, soil amendments, certified seeds and seedlings, pesticides registered with the Ministry of Agriculture, veterinary medicines, vaccines, animal feed and feed components, among others. Article 213 of the regulations establishes that the reduction only applies to products in Annex IX that, when required, are duly registered as agricultural or aquaculture inputs with the MAPA (Ministry of Agriculture, Livestock and Supply).

Deferral between taxpayers under the regular regime

In addition to the reduced tax rate, Article 214 of the regulations provides for the deferral of IBS and CBS payments on the supply of inputs listed in Annex IX when both the supplier and the purchaser are taxpayers under the regular regime. This means that the tax on the input is not collected at the time of purchase—it is deferred until the final product resulting from that input is sold. The practical effect is a significant improvement in cash flow for operations involving long production cycles.

Updated every 120 days.

Annex IX is not static. The regulation stipulates that the Ministry of Finance and CGIBS, after consulting the Ministry of Agriculture, review the list every 120 days, specifically to include new products that meet the requirements. This means that inputs not currently on the list may be included in regular cycles. For companies in the input sector and producers who use products not yet listed, monitoring these reviews becomes part of their routine tax management.

What's not on the list

Fuels, electricity, equipment, agricultural machinery, logistics services, and general production infrastructure are not included in Annex IX of inputs with reduced tax rates. These items are acquired at the full tax rate—and, for producers who are taxpayers under the regular regime, generate full credit that can be used in their tax calculations. However, for individual producers who are not taxpayers, these items arrive with a tax burden that does not generate credit for them. This makes the calculation of eligibility more relevant than it seems at first glance.

For rural producers, the practical message is this: check, input by input, if what you buy is in Annex IX. For those who buy large volumes — especially fertilizers and pesticides — the difference between 9.6% and 4.4% of effective tax rate represents significant numbers when you do the math.

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