The Brazilian Agribusiness Association (ABAG), in a statement this Wednesday (5), criticized Provisional Measure 1,227, which establishes compensatory measures for tax waivers, with the maintenance of the policy of payroll tax relief for companies and municipalities until 2027.
The MP includes restrictions on the reimbursement and compensation of presumed credits from the PIS/Cofins contribution, changes to the Tax on Rural Property (ITR) and limitations on the compensation of credits related to taxes administered by the Brazilian Federal Revenue Service (RFB).
“Although it is essential to implement actions to achieve fiscal balance, the measures announced blatantly violate the immunity of exports, the principle of non-cumulativeness, and the principle of non-confiscation, all of which are provided for in the Federal Constitution, by revoking a series of mechanisms in the legislation governing PIS and Cofins contributions, which would allow the offsetting of the credit balance of presumed credits from these contributions with any debts controlled by the RFB or reimbursed in cash,” they said in a statement.
For Abag, MP 1,227 goes against the grain of Brazilian socioeconomic growth, since it further burdens companies and significantly reduces the competitiveness of important sectors, such as agribusiness.
“It is important to emphasize that the mechanisms that had been established represented an advance in the national tax system by reducing the accumulation of federal tax credits. The measures, because they have a confiscatory profile, are a setback, strongly impacting the financial resources of companies, increasing costs and reducing the profitability of the entire agricultural chain, which is essential to guarantee food security throughout the planet, in addition to contributing to the social and economic development of the country and to the surplus of our trade balance”, they add.
Finally, the entity emphasizes that the payroll tax relief will undergo a gradual change starting in 2025, while the measures regarding the use of PIS/Cofins credits, as well as the prohibition of reimbursement of the credit balance derived from presumed credit, are permanent and effective immediately.
“As a result, the current financial planning of companies will suffer immediate implications, compromising investments and contributing to an increase in legal and business uncertainty in the country. That said, the reasons above justify the return of MP 1,227 by the National Congress, especially because it violates constitutional requirements”, they conclude.