Analysis: Rural producer in tax reform: less taxes, more competitiveness

Analysis: Rural producer in tax reform: less taxes, more competitiveness

There is little left for the tax reform to enter the testing phase. Because it is new, many prefer to defend chaos – especially because it is easier to oppose than to cooperate in adapting to the new system. In terms of rural producers, a sector that supports a large part of the Brazilian economy, it is clear that the most recurrent criticisms lack an in-depth analysis of the advances made.

These advances are not limited to the comparison with the initial versions of the proposals (PEC and PLPs) discussed in Congress and improved by the Parliamentary Agricultural Front (FPA), but also in relation to the current tax system.

Today, rural producers pay taxes embedded in the price of inputs. The same occurs with the purchaser of production. Two examples illustrate this scenario well:

1. ICMS on inputs – The revocation of Clause Five of Agreement 26/2021 forced the industry to reverse ICMS credits, transforming the tax into a cost incorporated into the price.

2. PIS/Cofins and presumed credit – Despite the rules of Law 10,925/2004, disputes over tax classifications and limitations of presumed credit reduce the effectiveness of non-cumulative credit.

In addition, there is an accumulation of ICMS, PIS and Cofins credits that cannot be fully utilized. In the end, both the producer and the consumer bear this “phantom taxation”, which even compromises export relief.

With the reform, PIS/Cofins, IPI, ICMS and ISS will give way to the IBS (states, DF and municipalities), the CBS (federal) and to the Selective Tax (federal). For agriculture, the central point is IBS and CBS, since the Constitution prevents the Selective from being applied to agricultural inputs and products – a relevant achievement.

The two new taxes work on the value-added model, with broad rights to credits. Furthermore, rural producers who earn up to R$3.6 million per year will be considered a non-taxpayer, there will be a 60% reduction in rates for inputs and products in the sector, and it will be possible to suspend taxation on sales destined for industrialization and exports.

Another advance is in the deferral of taxation on agricultural inputs (art. 138 of LC 214/2025). This means that the producer will not pay the tax on purchase: the tax will only be collected on the sale of the production, by the purchaser. The measure reduces the immediate cost and need for cash flow.

Based on the CNA, it is possible to measure the impact:

• Soy and corn in Rio Verde (GO): inputs represent 61% of the cost – all benefiting from the deferral.

• Corn in Guarapuava (PR): 60%.

• Beef livestock: between 46% and 79%, depending on the production stage.

• Dairy farming: 75%.

In summary, the new model eliminates hidden taxation of inputs, ensures non-cumulative use and creates clearer mechanisms for returning credits. It is a structural change that reduces costs, increases competitiveness and brings more transparency to pricing.

This does not mean, however, that the debate is closed. A possible evolution would be to extend the deferral to the sale of production as well, which would further reinforce the logic of simplification and relief in cash flow.

In any case, it is undeniable that rural producers are among the greatest beneficiaries of the reform. The challenge now is to prepare for the new environment: information and tax planning will be decisive instruments to make the most of the gains from this transition.

By Eduardo Lourenço, partner at Maneira Advogados; doctor and master in Constitutional Law; LLM in Tax Law

https://agromais.uol.com.br/2025/09/23/analise-produtor-rural-na-reforma-tributaria-menos-tributo-mais-competitividade/