“Tax calculation becomes centralized at the company’s headquarters, on a monthly basis, with most operations being taxed and broad credit rights allowed under the non-cumulative system, except for personal use and consumption…”
Fábio Pallaretti Calcini is a partner at the law firm Brasil Salomão e Matthes Advogados. He holds a law degree from the University of Ribeirão Preto and holds both his master’s and PhD in law from Pontifical Catholic University of São Paulo (PUC-SP). He is also a professor at FGV Law School in the State of São Paulo.
Fábio Calcini, partner at Brasil Salomão e Matthes Advogados
AgriBrasilis – Is the agribusiness sector prepared for the Tax Reform?
Fábio Calcini – From a political standpoint, the sector — through the Agricultural Parliamentary Front (FPA) and its organizations — has been active since the beginning of the discussions to ensure that the key demands of agribusiness were at least partially addressed and to preserve the preferential treatment established in Article 187, Item I, of the Brazilian Constitution. In practice, however, there is still a long way to go in terms of guidance, information and organizational preparedness for farmers to be ready for the changes beginning in 2026. Part of this gap results from government delays in the regulatory process and in releasing the necessary systems, as well as from infrastructure issues such as limited internet connectivity. It is not a problem created by agriculture, but by the state and its institutions.
AgriBrasilis – What are the main changes?
Fábio Calcini – The reform gradually eliminates PIS (Social Integration Program), Cofins (Contribution for Social Security Financing), ICMS (State Value-Added Tax on Goods and Services), IPI (Federal Excise Tax) — partially — and ISS (Municipal Service Tax) and creates the CBS (Contribution on Goods and Services, at the federal level) and the IBS (Goods and Services Tax, at the state and municipal levels), in addition to the IS (Selective Tax, at the federal level) and, in some states, new contributions on primary and semi-processed products.
CBS and IBS will follow largely uniform rules nationwide, differing mainly in their rates and in the application of the destination principle in the case of the IBS. Tax calculation becomes centralized at the company’s headquarters, on a monthly basis, with most operations being taxed and broad credit rights allowed under the non-cumulative system, except for personal use and consumption. Starting in 2033, ICMS incentives will end and special tax regimes will be standardized nationally, defined in the Constitution and in supplementary law.
AgriBrasilis – What changes for individual farmers and legal entities?
Fábio Calcini – Individual farmers (natural persons) and legal entities will now be treated the same for IBS and CBS purposes, a major shift. Those considered taxpayers will be required to calculate CBS and IBS monthly, in a centralized manner, starting in 2027, when CBS replaces PIS and Cofins.
The sale of “in natura” agricultural products will generally become taxable, although with a 60% reduction in the tax rate. This means farmers will need to get used to calculating tax on their outputs. In return, they will be entitled to non-cumulative credits on their purchases, while the acquisition of inputs will fall under the tax deferral system (postponing taxation to a later stage in the chain).
Farmers with annual revenue below R$ 3.6 million [US$ 660 thousand], or those operating under integration contracts, will not be considered taxpayers—unless they choose to opt into the regime.
AgriBrasilis – How should agribusiness players adapt?
Fábio Calcini – They will need to professionalize their management of incoming and outgoing transactions, maintaining precise monthly records, because the accumulation of credits may lead to refunds by the tax authorities. The sector will have to invest in staff training and in information systems that comply with the new rules. This effort brings costs and requires a cultural shift, but it can also generate management gains and greater knowledge of one’s own business.
AgriBrasilis – Can the Tax Reform Increase Legal Uncertainty?
Fábio Calcini – Initially, yes. A reform of this magnitude always creates doubts, divergent interpretations and disputes until case law and administrative practice become consolidated. This transition period is inevitable.
AgriBrasilis – The Supreme Federal Court is judging whether to maintain tax incentives for pesticides. What are the arguments for and against?
Fábio Calcini – The tax incentives that reduce the tax burden on agricultural inputs, especially pesticides, are being challenged in a Direct Action of Unconstitutionality before the Supreme Federal Court (STF). The argument against these benefits is based on a distorted view that generalizes cases of improper use and ignores the strict regulatory oversight these products undergo before being authorized.
Pesticides are essential to ensure productivity, food supply and food security. I understand that this is a legitimate political decision made by the Legislature, supported by technical evaluations from regulatory and oversight agencies and that removing these incentives would increase food prices and harm Brazil’s competitiveness. For this reason, we expect the STF to uphold the constitutionality of the ICMS (Tax on the Circulation of Goods and Services) and IPI (Tax on Industrialized Products) benefits and the treatment given to these products under the Tax Reform.