Canal Rural interviews Eduardo Lourenço about the impact of the proposed changes to IR

Canal Rural listened to Dr. Eduardo Lourenço, partner at Maneira Advogados, in a report that addressed the impact on rural producers of the changes proposed by the government in Income Tax.

See how changes in income tax can affect producers

According to a tax lawyer's analysis, with the changes proposed by the government, Fiagro may see an increase in its tax burden

July 6, 2021

By Paola Cuenca, from Brasília

Link to the video: https://www.canalrural.com.br/?video_slug=paola_20210706110328

The federal government's proposal for changes in income tax could harm rural producers. The notice is from Instituto Pensar Agro (IPA, formed by around 50 entities from the productive sector. This proposal was delivered to the Federal Congress around 10 days ago and is part of the debate on tax reform.

At a meeting of the Frente Parlamentar da Agropecuária (FPA), this Tuesday, 6th, in Brasília, members of the IPA warned deputies and senators about the risks at stake. For tax lawyer and IPA consultant, Eduardo Lourenço, the government's proposal for income taxation will make it difficult for rural producers to formalize their employment.

“The project is not changing the income tax legislation for individual rural producers, but even if they don't do this, it raises several doubts for those producers who are established via legal entities, those who have a holding company to manage their assets, their rural activity. This is all having a major influence on the increase in the load”, says Lourenço.

The project delivered by the federal government to Congress on the 25th, proposes that the net profit of a company, which is divided among shareholders, be taxed at source at a rate of 20%. Today, these amounts are tax-free.

“Today we pay nothing in this distribution of profits. But we pay nothing, because the PJ already has a tax burden of IRPJ, CSSL, PIS/Cofins that exceeds 34%, so it is already a very high burden”, explains lawyer Eduardo Lourenço.

Another concern for the production sector is linked to Fiagro, the Investment Funds in Agroindustrial Production Chains. In March, the Fiagro bill was vetoed by President Jair Bolsonaro. Tax incentives designed by parliamentarians were cut on the recommendation of the federal revenue. At the beginning of June, congress overturned the vetoes and Fiagro managed to match real estate investment funds in relation to taxation, an achievement celebrated by the FPA. However, in the government's proposal for income tax reform, any income distributed by these funds, including to exempt legal entities, must have a 15% withholding tax.

“It is always good to remember that the productive sector needs R$ 750 billion to produce its annual harvest and only receives a third of that from the Safra Plan, which is R$ 250 billion. Fiagro is created precisely as an alternative, where you can use this real estate fund not only to have a better income with it, but also to seek resources from national and international funds to acquire machines, increase your productivity, warehouses and all of that. In this model that was presented This tax reform is taxing precisely what was created not to be taxed”, highlights Nilson Leitão, president of IPA.

“Some say that there will be no change for Fiagro, but from our initial analysis and from what we have seen even from interviews with members of the federal government, it is in the sense that the treatment would be the same for all real estate investment funds, and as such there would be taxation”, highlights the tax lawyer and IPA consultant, Eduardo Lourenço.

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