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Change Preserves R$ 110 Billion in Rural Income from Extra Taxation and May Reduce Government’s Expected Revenue by Up to R$ 3 Billion.
The approval of the new income tax model in the Chamber of Deputies brought a novelty that ignited debates: a loophole inserted in the text protects agricultural income from the minimum tax of 10% for high-income taxpayers.
According to the portal of Folha de S. Paulo, approximately R$ 110 billion in rural income is shielded from additional taxation, in a scenario where the government projected increasing revenue to compensate for tax expenditures. The estimate is that this loophole may reduce revenue by up to R$ 3 billion as early as next year, according to calculations by experts.
How the Change Benefits Agribusiness
The text reported by the President of the Chamber, Arthur Lira, included in the calculation base of the minimum tax a wording that excludes the exempt portion from rural activities.
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This means that producers who declare income for Income Tax as individuals will not have this income considered for the extra taxation.
In practice, this rule expands the benefit already existing in the presumed profit system. Today, those who opt for this system have 80% of revenue automatically treated as cost and only 20% as profit subject to taxation without the need for detailed proof.
The exclusion approved by the Chamber reinforces this advantage and makes the burden even lighter for the sector.
The Billion-Dollar Impact on Public Coffers
The Ministry of Finance estimated to collect R$ 25.2 billion with the new minimum tax and an additional R$ 8.9 billion from taxation on dividends sent abroad.
However, with the loophole for agribusiness, part of this expectation is compromised.
According to estimates, R$ 62 billion of the exempt income from the sector is in the hands of taxpayers earning above R$ 600,000 per year.
Among those earning over R$ 1 million annually, the shielded amount reaches R$ 55 billion. This concentration reinforces the perception that the benefit favors the largest producers and diminishes the progressivity of the tax.
The Risk of Income Migration
Experts warn of another side effect: the possibility that sector entrepreneurs may migrate part of their gains to individuals, in order to escape the taxation on corporate dividends.
The current design creates a incentive to reorganize declarations, which could further increase revenue loss over the coming years.
Moreover, the text includes the protection in the same sentence that details the minimum tax rule. This makes it difficult to veto just this point by the president, since the Executive cannot suppress individual words or isolated segments, only entire provisions.
In other words, to block the benefit, they would have to veto the entire foundation of the new tax.
Other Approved Concessions
In addition to the shielding for agribusiness, the approved report ensures exemption on profits and dividends related to results obtained until December 2025.
These amounts can be distributed until 2028 without tax incidence, in an agreement arranged between the government and Congress to provide predictability to companies.
Starting in 2026, a 10% tax on dividends paid to individuals will come into effect.
However, the approved provision ensures a longer transition period, which in practice reduces the immediate scope of the new fiscal policy.
The new income tax model raises questions: Did the agribusiness need this tax shielding?
On one hand, lawmakers argue that the sector is strategic and already faces a high indirect burden.
On the other hand, critics point out that the measure drains revenue and preserves large producers to the detriment of fiscal progressivity.
And you, what do you think? Is the approved loophole a necessary adjustment to maintain the agro’s competitiveness or an unfair privilege that harms the country’s revenue?
Share your opinion in the comments; we want to hear from those closely following this debate.
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