VALOR listens to Eduardo Lourenço about a project that benefits the corn production chain

Report from Valor Econômico published this Friday (20/5) addresses the controversy surrounding a bill that seeks to benefit the corn ethanol production chain, but which has worried the animal protein sector, which uses the grain to feed chickens and pigs. Dr. Eduardo Lourenço, partner at Maneira Advogados, was heard to comment on the topic.

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New PL worries the poultry and pork chain

Proposal suspends the incidence of PIS and Cofins contributions on the sale of cereals used in ethanol, but revokes the right to presumed credit of chicken and pork agribusinesses

By Rafael Walendorff — From Brasília

20/05/2022 05:02 Updated 4 hours ago

A bill created to benefit the corn ethanol production chain has left the animal protein sector “terrified” about the possibility of increased costs. The proposal suspends the incidence of PIS and Cofins contributions on the sale of cereal, used in the production of biofuel, and its derivatives, such as oil and flour, but revokes the right to presumed credit of chicken and pig agribusinesses, which need the grain to feed the animals.

In calculations by the Brazilian Animal Protein Association (ABPA), the measure could generate an extra cost of 3% to 5% for meat companies, which would be passed on to consumers at the end. The end of the benefit would generate an increase of R$500 million per year in the accounts of these companies.

"This measure will hit the consumer's table. It's a cost increase in the vein", said Ricardo Santin, president of ABPA. “The presumed credit exists to rebalance the chain, as the cumulative taxation on the corn producer is passed on to the company”, he added.

This occurs because the farmer, when purchasing inputs and equipment, or when paying for the electricity he consumes, does not take credit or tax the sale of corn. "The agroindustry, when it buys corn, carries the entire cumulative tax burden, and that's why we credit ourselves. It's a way of compensation and tax administration, so that the small producer doesn't need to rely on an accounting service", explained Santin.

Written by former senator Cidinho Santos, PLS 117/2018 extends to corn the tax treatment already applied to soybeans since 2013 – that is, it suspends the incidence of Contribution for PIS/Pasep and Cofins on revenues from sales of the cereal and its derivatives. Approved in the Senate, the matter has already reached the Chamber.

Santin highlights that he is not against tax relief for the ethanol segment, but that the measure cannot cause harm to the agroindustry that uses corn in animal feed. In practice, the project avoided the provision of a “double benefit”, which would not be authorized by the government, with the permission to generate presumed credit in the purchase of corn used as an input by industries and to suspend the application of the contribution in the sale of finished products.

The sectors involved decided to seek an agreement so that the proposal can be changed in the Chamber. “Adjustments will be proposed to maintain the benefit of the presumed credit, without affecting other production chains, and only the extension to corn bran and corn oil of the same tax treatment granted to soybeans with exemption from PIS and Cofins will be maintained”, stated Guilherme Nolasco, president of the National Corn Ethanol Union (Unem).

The author of the proposal, Cidinho Santos, said that adjustments will be made “to be able to minimize and remove any problems that could have for other production chains”. The idea is to submit a text correction amendment to remove corn grain from the list of products that will have contributions suspended, as well as adjustments to make it clear that the measure only applies to cereal bran and oil.

The text will say that the PIS and Cofins contribution will be suspended on the sale of oil and bran. Corn grain, purchased for animal feed, will continue to be taxed, and agribusinesses will continue to obtain presumed credit when purchasing the input.

Guilherme Nolasco, from Unem, stated that small producers will be the biggest beneficiaries if the project becomes law. "The small individual producer is paying these taxes incorporated into the price of soybean meal without being able to receive credit and compensation for these taxes. The proposal brings equality with soybean meal."

“The PL approved by the Senate is an instrument of tax adequacy, in order to guarantee equality for products that have identical destination. Even if the Chamber has to make some small adjustments, it is certain that the approval of the project will bring benefits to the entire corn production chain”, said Eduardo Lourenço, partner at Maneira Advogados. According to the Ministry of Economy, the loss of revenue with the extension of the tax exemption to corn is R$28.64 million.

https://valor.globo.com/agronegocios/noticia/2022/05/20/novo-pl-conce-a-cadeia-de-aves-e-suinos.ghtml