BRAZIL Law and Practice Contributed by: Domicio dos Santos Neto, Frederico Favacho, Henrique Erbolato and Fernando Ferreira, Santos Neto Advogados
Traditional Credit and Financing Instruments • Agribusiness Product Certificates (CPRs): (a) physical and financial CPRs (CPR-F) carry no WHT or Financial Transactions Tax (IOF) at issuance; and (b) secondary market transfers and capital gains follow standard financial asset tax rules based on the investor’s regime (15% to 22.5% for individuals and Corporate Income Taxes). • Export Credit Notes (NCEs) and Bank Credit Notes (CCBs): (a) interest yields incur WHT at regressive rates (22.5% to 15%) based on maturity, unless structured into exempt securitisation vehicles like CRAs. • Export Pre-Payment (PPE): (a) foreign currency advances for future shipments benefit from a 0% rate on IOF and WHT on interest, provided physical exports occur within statutory deadlines. • Transaction and Collateral Taxes: (a) Tax on Financial Transactions (IOF) is generally zero-rated for foreign exchange contracts ( IOF - Câmbio ) linked to agricultural export revenues and qualifying rural credit. • Guarantees and Registry Fees: (a) granting in rem guarantees (eg, fiduciary trans- fer of land or crop pledges) does not trigger Real Estate Transfer Tax (ITBI), which applies only upon actual title transfer through enforce- ment or non-exempt corporate restructuring. 8. Dispute Resolution and Enforcement 8.1 Enforcement of Agribusiness Contracts Agribusiness contracts may be enforced through judi- cial proceedings, including ordinary actions, enforce- ment proceedings based on enforceable instruments and specific-performance remedies, depending on the nature of the obligation and the documents sup- porting the claim. Brazilian procedural law allows courts to order spe- cific performance where appropriate. For obligations to do or refrain from doing something, the court may grant specific relief or adopt measures capable of producing an equivalent practical result. Obligations
tionally exempt, benefiting from zero-rating for IBS/ CBS alongside full credit recovery for supply chain inputs. • Subsidised credit and Plano Safra : through the annual Harvest Plan ( Plano Safra ), producers gain access to below-market financing. This acts as a core fiscal incentive and is tied to tax compliance and environmental validation via the CAR. • Tax relief on agricultural inputs: essential inputs enjoy significant ICMS reductions or exemptions under state agreements ( Convênios ICMS ), as well as a mandatory 60% rate reduction under the IBS/ CBS system. • ITR environmental discounts: rural landowners who register protected areas can deduct these preser- vation zones directly from the taxable base of the ITR. 7.3 Taxation of Financial and Capital Instruments Agribusiness financing in Brazil relies heavily on dedi- cated capital market instruments, which benefit from targeted tax exemptions designed to mobilise private capital. Exempt Capital Market Instruments • CRAs and LCAs (Agribusiness Receivables Certifi- cates/Credit Bills): (a) for individual investors, income and capital gains are exempt from Individual Income Tax (IRPF), subject to regulatory criteria and mini- mum holding periods; and (b) corporate investors are subject to standard corporate taxation (IRPJ/CSLL) or withholding tax (WHT) at regressive rates ranging from 15% to 22.5%. • FIAGROs (Agribusiness Investment Funds): (a) for individual investors, distributed income is IRPF-exempt, provided quotas are traded on an organised market, the fund maintains at least 100 quota holders (Law No 14,754/2023), and no single individual holds 10% or more of total quotas or yields; and (b) corporate and non-qualifying investors are subject to standard corporate income tax upon distribution, redemption or sale.
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