With new MP, government limits tax benefits and Agro promises to stop measure

The federal government issued a Provisional Measure that limits the use of PIS and Cofins credits by companies. The measure impacts agro-industries and exporters, which has already caused a wave of negative repercussions in the sector. To discuss the issue, ESTADÃO spoke with tax expert Eduardo Lourenço, partner at Maneira Advogados.

With new MP, government limits tax benefits and Agro promises to block measure

Cecafé, ABPA, ABIEC and Abrafrigo criticize the Provisional Measure and talk about loss of competitiveness

By: Daumildo Júnior

The government issued a Provisional Measure (MP) that limits the use of PIS (Social Integration Program) and Cofins (Contribution for Social Security Financing) credits by companies. The measure impacts agro-industries and exporters, which has already caused a wave of negative repercussions in the sector.

MP nº 1,227/2024 was the alternative found by the Ministry of Finance to compensate for the loss of revenue by maintaining the payroll tax exemption. The ministry's estimate is that, in 2024, R$26.3 billion will not enter the public coffers due to the tax relief approved by the National Congress last year. With the MP published this past Tuesday, 4th, the expectation is to restore this balance with R$ 29.2 billion that will be generated through changes in PIS and Cofins.

As it is an MP, the regulations come into effect at the time of publication in the Official Gazette of the Union and have the weight of law. However, it must be approved by the National Congress within 180 days to effectively become legislation. In this sense, the ruralist caucus already intends to stop the MP and describes the initiative as part of a “collective drive” and “insatiable”.

"[The MP] It is of great concern to the sector. It is a topic that demands an in-depth study because it causes us enormous concern. We are working on Tax Reform, looking for solutions for the sector, including the compensation of credits, and a Provisional Measure came out dealing with exactly the opposite of this. Unfortunately, I think it is another battle front that we will have there in the coming days", pointed out the president of the Parliamentary Agricultural Front (FPA), deputy Pedro Lupion (PP-PR).

What changes for agricultural companies?

Among the actions foreseen in the MP, at least two must directly impact the sector. The first change prevents companies from carrying out so-called cross-compensation, which is when they take accumulated PIS and Cofins credits and deduct them from other taxes, such as IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Profit).

The other change is that companies will no longer be able to obtain cash reimbursement for accumulated credits. In practice, the two modifications provide that these credits will only be used to deduct PIS and Cofins owed by companies.

“For the agricultural sector, this measure is very harmful, because in addition to bringing legal uncertainty, it brings an increase in the tax burden and costs, whether in exports or in food production internally”, said to Agro Estadão tax lawyer, Eduardo Lourenço.

This credit is obtained so that the tax phenomenon of cumulative taxes in the chain does not occur. Basically, this is to ensure that there is no double or triple taxation when the tax has already been collected at some point within the chain.

“There is a rule that when we make purchases from individuals, I do not have PIS and Cofins credits, because individuals are not PIS and Cofins taxpayers. So I do not have this credit. However, the rural producer, an individual, who sold this product to the industry, acquired inputs taxed with PIS and Cofins. So, if you don't give presumptive credit to the industry, there will be tax accumulation, because what the rural producer paid in taxes [on inputs] will end up being imported for the price”, explains Lourenço.

“Brazil becomes less competitive”

The Brazilian Coffee Exporters Council (Cecafé) expressed opposition to the government's initiative. According to the entity, “the measure is serious, automatically impacting companies' cash flow, influencing costs, including, from the perspective of the international scenario, making Brazil, the largest coffee exporter, less competitive.”

The Brazilian Animal Protein Association (ABPA) and the Brazilian Association of Meat Exporting Industries (ABIEC) also criticized the measure. Along the same lines as coffee exporters, the associations spoke of the risk of loss of competitiveness in addition to cost increases.

“The effect on production costs is direct and immediate. Companies will lose competitiveness and sustainability to maintain jobs, in addition to the disincentive for investment and creation of new jobs”, emphasized ABPA and ABIEC in a joint note.

The Brazilian Association of Refrigerators (Abrafrigo) said it was “surprised” by the measure and that food safety cannot be disregarded when making the changes. “The increase in the tax burden promoted by MP 1227/2024 will ultimately represent greater financial pressure for the beef producing industries, also affecting rural producers and consumers, who are already suffering from food inflation,” he stated in a note.

Under negotiation in Congress, the regulation of Tax Reform is also a concern after the MP's announcement. The conclusion is that there is no confidence that the legislation that passes will be respected.

“How will the taxpayer trust that in two years, at the time of [implementation] of the Tax Reform, the system will work when today the government is taking measures to limit the use of credits?”, asks lawyer Eduardo Lourenço.

https://agro.estadao.com.br/agropolitica/com-nova-mp-governo-limita-beneficios-fiscais-e-agro-promete-barrar-medida