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Pensar Agro | Magazine | Fernanda Silveira
For approximately two decades, the level of scrutiny and oversight exercised by Brazilian tax authorities has been changing. The combination of digitalized tax information and expanded monitoring of financial transactions is reshaping the relationship between taxpayers and the State. With the Tax Reform, this oversight is advancing even further, introducing new business paradigms that promise to transform the Brazilian economy.
Since the creation of the Public Digital Bookkeeping System (SPED), together with modules and systems such as the Electronic Invoice (NF-e), DCTFWeb, DIRF, DIRPF, ECD, ECF, eSocial, and the customs systems PUComex/Siscomex, the government has begun receiving electronically an unprecedented volume of information about taxpayers’ economic activities. In practice, Brazil’s Federal Revenue Service has acquired the effective ability to cross-reference data, identify discrepancies, and detect tax irregularities with a degree of precision that was not possible in a paper-based environment.
At the same time, since Complementary Law No. 104/2001, financial oversight of taxpayers has expanded through successive ancillary reporting obligations, including Decred, e-Financeira, and DIMP. With PIX, this oversight has reached a new level: transactions are now recorded directly by the government in real time, without relying on subsequent reporting by financial institutions.
This process was not imposed unilaterally by the State; rather, it emerged from the adoption and development of digital practices within Brazilian society itself. People increasingly use less cash and voluntarily generate electronic records of their lives: payments, transfers, purchases, contracts, photographs posted on social media, and more.
Agribusiness is no different. Agricultural operations, from the purchase of inputs to the delivery of harvested crops, now involve recorded information, automated measurements, and tracking systems that continuously generate data. As a result, tax authorities need only organize and make use of the vast amount of information already produced by these activities.
Against this backdrop, Brazil’s Federal Revenue Service has developed a series of initiatives targeting the agricultural sector in recent years. From DeclaraGrãos, launched in Rio Grande do Sul in 2019, through the National Tax Compliance Program introduced in 2023, to the most recent phases of Declara Agro, tax authorities have demonstrated that farmers and agricultural producers are now subject to continuous and increasingly sophisticated scrutiny.
In the same context, the replacement of the Rural Property Registration Certificate (CCIR) by the Brazilian Real Estate Registry (CIB) is expected to provide greater clarity regarding the ownership and use of rural properties.
With a more reliable registry, the data cross-checking already performed by the Federal Revenue Service will become even more robust, drawing on information from the Rural Producer’s Digital Cash Book, the property’s CNAE economic activity classification, the Rural Property Tax Return (DITR), the section of the Individual Income Tax Return (DIRPF) relating to agricultural activities, invoices issued by producers and invoices issued in their names as purchasers, social security filings, and many other sources.
Taken together, these sources create a comprehensive picture of agricultural operations.
It is within this broader context that Brazil’s Tax Reform comes into play. With IBS and CBS levied separately from the transaction price—and disregarding, for the purposes of this discussion, specific transactions that may also be subject to the Selective Tax—the government intends to change the pricing logic for agricultural inputs, farm production, and food and/or industrialized products derived from agriculture.
Today, the cost of these taxes is largely invisible to farmers: they do not pay them directly, either because they benefit from tax deferrals or because they ultimately absorb them as embedded costs in the prices of their purchases.
The Tax Reform seeks to make these amounts explicit, allowing farmers to determine more clearly whether it is advantageous to operate under the same logic as large companies, calculating tax debits and credits to determine the amount effectively due. The reasoning is similar to that already applied under the Individual Income Tax (IRPF), where income is reported and deductible expenses are subtracted to reduce the final amount payable.
For small-scale producers, the Tax Reform allows the current approach to be maintained. However, this decision depends precisely on the weight of acquisition costs and the producer’s actual ability to establish more robust control systems for claiming tax credits. The questions must be practical: Am I able to quantify my costs and profit margins? In my day-to-day operations, can I immediately measure and price my agricultural production and issue invoices accurately? If not, how much would I need to invest—and what would the benefits be?
The plain reality is that small-scale producers are not exempt from issuing electronic tax documents, despite legitimate demands that this aspect of the Tax Reform be reconsidered. Unless the rules are changed, small producers will face genuine difficulties in achieving immediate and adequate compliance, particularly when they lack appropriate equipment to measure and weigh their production or when their properties do not even have cellular or satellite internet connectivity.
For exports, the new requirements imposed on trading companies are substantial. If a company fails to organize its operations appropriately, it will not be able to export under tax suspension arrangements or claim refunds of tax credits that would otherwise have arisen throughout the supply chain.
Furthermore, the stronger linkage between financial transactions and the new rules governing tax credits based on electronic tax documents is likely to reduce the number of companies eligible to register as commercial exporters in Brazil. At the same time, these rules prevent producers and other industry participants from simply suspending taxes by declaring that transactions are intended for export without a registered commercial exporter authorized to validate such suspension.
Finally, the new rules governing tax deferrals on input purchases, together with the gradual elimination of such deferrals for intrastate transactions, are likely to produce an unprecedented opening of regional markets, both for the sale of agricultural inputs and for the supply of food products.
In a system in which the tax burden is the same regardless of where an input or product originates, all participants in the value chain will be able to buy and sell under equal competitive conditions. This is probably the most significant and consequential impact of the end of regional tax incentives on the sector—and it should be taken into account by those currently defining their business strategies for the years ahead.
These changes are structural and must be carefully considered. Attorneys, accountants, and other advisors can help organize operations, ensure compliance with the new framework, and develop appropriate financial projections. But strategy ultimately belongs to the business owner and the farmer.
Brazilian agribusiness has become the powerhouse it is today because of its resilience and the remarkable ability of those operating in the sector to identify and seize new opportunities. Knowledge and expertise from outside the farm may contribute data and analysis, but those who make the difference are the ones who make decisions and turn them into action in the field.
Attorney and Tax Consultant. Partner at Simões Pires Consultoria Empresarial. Ph.D. in Tax Law, Master’s Degree in Public Law, Specialist in Tax Law, and Graduate-Level Professor at the Federal University of Mato Grosso (UFMT) and IEC/PUC Minas, Pontifical Catholic University of Minas Gerais (PUC Minas).
Fernanda Silveira is a Business Partner at Simões Pires.
