BRAZIL Law and Practice Contributed by: Domicio dos Santos Neto, Frederico Favacho, Henrique Erbolato and Fernando Ferreira, Santos Neto Advogados
• the capacity and authority of the parties; • the validity and enforceability of the financing documents; • the eligibility of debtors or receivables; • the validity of collateral; and • compliance with applicable regulatory require- ments. Legal opinions may be particularly relevant where the transaction involves the interaction of different legal and regulatory regimes or where the eligibility of the underlying assets depends on the nature of the debt- or’s activities and supporting documentation. 6.3 Due Diligence and Documentation Legal due diligence in agriculture sector financings generally focuses on the legal status of the debtor, the nature and origin of the underlying assets or receiva- bles, and the enforceability of the relevant contractual and security arrangements. Depending on the struc- ture, the review may include: • the debtor’s corporate purpose and CNAE clas- sification; • evidence of its actual agricultural or agribusiness activities; • commercial contracts; • receivables documentation; • licences; • real estate documentation; • environmental compliance; and • existing security interests. In transactions involving CRAs, CDCAs or other struc- tured instruments, particular attention may be required to establish the eligibility of the relevant debtor and receivables under the applicable regulatory frame- work. The analysis may therefore extend beyond a conventional corporate due diligence exercise and require examination of the underlying commercial activity. 6.4 Legal Practice and Risk Allocation Regulatory uncertainty may influence the allocation of legal and commercial risks in agriculture sector trans- actions. Where the eligibility of a debtor, receivable or collateral depends on the interpretation or interaction of different legal and regulatory provisions, transaction
parties may seek additional contractual protections, legal opinions or alternative structures to mitigate potential risks. In this context, legal advisers may contribute to iden- tifying regulatory risks at an early stage and assess- ing their potential impact on the transaction structure. Depending on the circumstances, the parties may allo- cate specific risks through representations and war- ranties, conditions precedent, indemnities, covenants, eligibility criteria or other contractual mechanisms. Regulatory considerations may therefore influence not only the legal documentation but also the economic structure of the transaction and the allocation of risks among investors, financiers, originators and other par- ticipants. Shaped by a mix of federal, state and municipal regu- lations, Brazil’s tax regime for agribusiness is inher- ently complex, yet it incorporates specific exemptions and simplified frameworks designed to foster food security and incentivise rural production. A producer’s specific tax treatment depends on their legal struc- ture (individual v corporate entity), the nature of their operations, and their geographic location. The sector is currently undergoing a structural transformation due to the ongoing implementation of the Tax Reform. Key Federal Taxes The main federal direct taxes, also applicable to the agribusiness industry, are as follows. • Corporate Income Taxes – Imposto de Renda da Pessoa Jurídica (IRPJ) and Contribuição Social sobre o Lucro Líquido (CSLL) – are levied at an approximate combined rate of 34%, typically under one of the following regimes: (a) the Presumed Profit Regime is common for mid-sized producers, applying fixed profit mar- gins (usually 8% on the sale of goods or 32% on services) to gross revenue for tax calcula- tion; 7. Taxation and Incentives in Agribusiness 7.1 Tax Regime for Rural Operations
20 AGRICULTURAL LAW 2026
CHAMBERS.COM
Powered by FlippingBook