Brazil’s tax reform gives agribusiness a treatment of its own under IBS and CBS, built from three pieces. A rural producer with annual revenue below BRL 3.6 million is left out of taxpayer status — and whoever buys from them takes a presumed credit. Unprocessed agricultural products and farm inputs have the rate cut by 60%. And items such as vegetables, fruit and eggs are zero-rated. The rules are in Complementary Law 214/2025 and take effect over the 2026–2033 transition.
- Non-taxpayer producer: a rural producer (individual or company) with revenue below BRL 3.6 million/year does not collect IBS and CBS on sales (art. 164); the limit is updated by the IPCA (art. 167).
- Presumed credit: whoever buys from the non-taxpayer producer takes a presumed IBS/CBS credit, so the chain keeps its non-cumulativity (art. 168).
- Rates: a 60% reduction (you pay 40%) for unprocessed agricultural products and inputs (art. 128); a zero rate for vegetables, fruit and eggs (art. 143) and for the National Basic Food Basket (art. 125).
- Exports: immune to IBS and CBS, with credits preserved — the exporting agribusiness accumulates a credit balance to be refunded.
- When: full CBS in 2027 and IBS over the 2029–2033 transition.
Below, the TaxUp team details each mechanism, with the exact legal basis, impact cases by sub-segment and the timeline — plus what usually goes unnoticed. It is a sector with a regime of its own, like healthcare.
What changes for agribusiness: the overview
Agribusiness has no “agribusiness tax” in the tax reform. What exists is a set of rules that, together, relieve much of the chain and preserve credits along it. Three fronts:
| Mechanism | How it works | Legal basis (LC 214/2025) |
|---|---|---|
| Non-taxpayer producer | A rural producer with revenue below BRL 3.6 million/year is not an IBS/CBS taxpayer | Art. 164 |
| Presumed credit | Whoever buys from the non-taxpayer producer takes a presumed credit, so the chain keeps non-cumulativity | Art. 168 |
| Reduced or zero rate | Unprocessed products and inputs get a 60% reduction; vegetables, fruit and eggs are zero-rated | Arts. 128 and 143 |
The underlying logic: little tax at the farm gate, credit flowing along the chain, and relief concentrated on essential food and inputs.
Before the reform: the agribusiness patchwork
Taxing consumption in agribusiness was always a mosaic. In ICMS, the sector lived on deferrals, base reductions and presumed credits granted state by state — many at the heart of the “tax war”. In PIS and Cofins, agribusiness relied on the presumed credit created by Law 10,925/2004 so as not to lose credit when buying from rural producers who did not collect those contributions.
That fragmented design made agribusiness one of the country’s most litigation-prone sectors. The best-known example is the long Funrural dispute: only in 2017, in RE 718,874 (Theme 669), did the Supreme Court hold the individual rural employer’s contribution on the revenue from the sale of production to be constitutional.
The reform does not erase that history, but it reorganises the consumption side. The scattered presumed credit of Law 10,925/2004 becomes a general rule under IBS and CBS (art. 168 of LC 214/2025); the tangle of state ICMS benefits gives way to a national 60% reduction and cases of zero rate.
Legal basis
Agribusiness treatment flows from the constitutional authorisation for differentiated regimes (art. 9 of Constitutional Amendment 132/2023; export immunity in art. 156-A, § 1, III, with credits preserved) and is detailed in LC 214/2025:
| Topic | Legal basis (LC 214/2025) |
|---|---|
| Non-taxpayer rural and integrated producers | Arts. 164 to 167 |
| Presumed credit on purchases from a non-taxpayer producer | Art. 168 |
| 60% reduction (unprocessed products, inputs, food) | Art. 128 |
| Zero rate (vegetables, fruit and eggs) | Art. 143 |
| National Basic Food Basket (zero rate) | Art. 125 and Annex I |
| Specific cooperatives regime (optional) | Arts. 271 and 272 |
The non-taxpayer rural producer: the BRL 3.6 million limit
The centrepiece is art. 164 of LC 214/2025: the rural producer, individual or company, with revenue below BRL 3,600,000.00 in the calendar year is not considered an IBS/CBS taxpayer. The integrated rural producer is also a non-taxpayer, regardless of revenue. The BRL 3.6 million figure is updated each year by the IPCA (art. 167).
Not being a taxpayer means not assessing or collecting the new taxes on one’s own sales — which simplifies life for the small and mid-sized producer. Some points deserve attention:
| Situation | Rule (arts. 164–166) |
|---|---|
| Exceeded BRL 3.6 million in the year | Becomes a taxpayer from the second month after the excess (art. 164, § 2) |
| Excess of up to 20% of the limit | Effects apply only in the following calendar year (art. 164, § 3) |
| Start of activity | Limit proportional to the months of activity (art. 164, § 4) |
| Several companies of the same producer | Revenues are added to check the limit (art. 164, § 6) |
| Wants to be a taxpayer below the limit | May elect at any time; the election is irrevocable for the year (art. 165, § 2) |
Electing to be a taxpayer (art. 165) is not a formality. For a producer that sells to companies and has plenty of input credit to take, collecting under the regular regime may beat staying out. It is a case-by-case calculation — a point of tax planning.
The presumed credit: how the chain keeps its credit
If the producer does not collect IBS and CBS, the buyer would have no credit to take — and non-cumulativity would break. Art. 168 solves it: a taxpayer in the regular regime that buys goods and services from non-taxpayer rural or integrated producers may take a presumed IBS and CBS credit.
In practice, the agribusiness, trader or wholesaler that buys the production records on the invoice the transaction value, the presumed credit and the net value (art. 168, § 1), and carries that presumed credit forward along the chain.
The sensitive point is the percentage of the presumed credit. It is not fixed in law: it is set and published each year, by September, by a joint act of the Ministry of Finance and the IBS Steering Committee (CGIBS), effective the following year (art. 168, § 4). That figure — still to be published — will say how much credit the chain can recover.
Rates: zero, minus 60% and full
For agribusiness products and inputs, the reform works in three bands:
| Band | What qualifies | Legal basis |
|---|---|---|
| Zero rate | Vegetables, fruit and eggs; items of the National Basic Food Basket | Art. 143; art. 125 and Annex I |
| 60% reduction (you pay 40% of the rate) | Unprocessed agricultural, aquaculture, fishing, forestry and plant-extraction products; agricultural and aquaculture inputs; food for human consumption | Art. 128 |
| Full rate | Other agribusiness goods and services outside the lists above | General rule |
Read it precisely: “60% reduction” is not a 60% rate — it is a 60% cut on the standard rate, i.e. you pay 40% of it. And the lists apply by tax classification (NCM/NBS) in the law’s annexes, not by a product’s generic name.
Cases by sub-segment: the impact with numbers
To leave the abstract, four illustrative angles. Important: the reference rate (~26.5%) is an estimate from the Ministry of Finance technical note (SERT/MF, 2024), not set in law; and the presumed-credit percentage is published yearly. The figures are scenarios, not promises.
Small and mid-sized producer (below BRL 3.6 million)
Left out of taxpayer status (art. 164): it does not assess or collect IBS and CBS on sales. The direct gain is simplicity — and the chain buying from it loses nothing, because it takes the presumed credit (art. 168). The “full invoice” becomes its obligation, so that credit can exist.
Large producer (or one electing the regular regime)
Above BRL 3.6 million — or by election (art. 165) — the producer collects, but with advantages: the unprocessed product has a 60% reduction (estimated effective rate ~10.6%) and it credits the IBS/CBS on all its inputs (pesticides, fertilisers, fuel, machinery). For a producer with heavy input costs, the regular regime may beat staying out.
Agribusiness and traders
They buy from many non-taxpayer producers and take the presumed credit (percentage set yearly); they sell food at a 60% reduction or processed goods at the full rate. The management centre becomes the correct assessment of the presumed credit and each product’s classification.
Exporter
Exports are immune to IBS and CBS — and, unlike an ordinary exemption, they keep the credits on purchases. The exporting agribusiness, which already ran ICMS credit balances, now accumulates an IBS/CBS credit to be refunded: cash depends on the speed of the refund, which becomes a front of credit recovery.
| Sub-segment | Treatment | What decides the result |
|---|---|---|
| Producer below BRL 3.6m | Non-taxpayer (art. 164) | Simplicity; the invoice gives the buyer a presumed credit |
| Large producer / elector | Unprocessed −60% (~10.6%) + input credit | Volume of taxed inputs |
| Agribusiness / trader | Presumed credit on purchase + sale at −60% | Presumed-credit % (to be set) + classification |
| Exporter | Immune exports + credits preserved | Speed of refunding the credit balance |
Points usually missed
Exports: immune, but they build a credit balance
Export immunity (with credits preserved) is one of agribusiness’s biggest advantages in the reform — but it has a cash effect: the more the exporter buys with IBS/CBS and sells immune, the larger the credit balance it accumulates. Managing and refunding that credit becomes central, above all for exporting traders and agribusinesses.
Funrural does not end
The reform is about consumption taxes (ICMS, ISS, PIS, Cofins, IPI). Funrural — a social-security contribution on rural sales revenue — is a different tax, outside that scope, and remains. Indeed, the Funrural rate on gross revenue rose to 1.63% in April 2026, by its own social-security legislation — a change unrelated to the consumption reform. Two separate conversations.
The presumed-credit percentage is not out yet
The number that defines how much the chain recovers when buying from a non-taxpayer producer (art. 168, § 4) is published each year by act of the Ministry of Finance and the Steering Committee. Planning the chain without watching that publication is working blind.
Pesticides and fertilisers
Beyond the general rule for farm inputs, pesticides and fertilisers follow a specific list by NCM, with a 60% reduction and a deferral regime (art. 138 and Annex IX of LC 214/2025). Note: LC 227/2026 recalibrated that deferral — it now reduces the buyer’s presumed credit (art. 138, § 9) — a technical point still under debate.
Cooperatives and the integrated producer
Cooperatives have their own paths. A rural producers’ association or cooperative can be treated as a non-taxpayer producer when its revenue stays below BRL 3.6 million and it is made up exclusively of individual producers also below that limit (art. 164, § 5). The law also provides an optional specific regime for cooperative societies (arts. 271 and 272): a zero rate in operations such as member-to-cooperative, and a mechanism to transfer credits from the member to the cooperative, preserving non-cumulativity.
The integrated rural producer — tied to an integrator by a vertical-integration contract (art. 164, § 1) — is always a non-taxpayer, and the buyer’s presumed credit, in that case, is based on the integrated producer’s contractual remuneration (art. 168, § 2).
Timeline for agribusiness
| Year | What happens |
|---|---|
| 2026 | Test year, with token CBS and IBS rates |
| 2027 | Full CBS (PIS and Cofins extinguished); the agribusiness mechanisms start applying to the CBS |
| 2029–2032 | Transition of the IBS, with ICMS and ISS phasing down year by year |
| 2033 | Full regime: IBS and CBS in force in full |
The producer selling to agribusinesses and traders feels the effects first through the CBS, in 2027, and then through the IBS, in the transition ending in 2033.
What changes in practice
Invoice and tax ID. Even the non-taxpayer producer must issue an electronic invoice, because it is from it that the buyer’s presumed credit flows (art. 168, § 1). Without a properly filled invoice, the next link loses credit.
The choice to elect or not. For a producer with a relevant volume of taxed inputs, the calculation between staying out or entering the regular regime (art. 165) can flip the result.
Product classification. Since zero, 60% reduction and full rate depend on the classification in the law’s annexes, classifying each product and input becomes critical.
In the TaxUp team’s view, agribusiness leaves the reform with a lower average burden, but with managing the presumed credit, the export refund and the classification as the new centre of attention — above all for the agribusiness and traders.
Common mistakes and risks
- Reading “60% reduction” as a 60% rate. It is the opposite: a 60% cut, paying 40% of it (art. 128).
- Thinking a non-taxpayer producer issues no invoice. It does — and its invoice generates the buyer’s presumed credit (art. 168, § 1).
- Confusing the consumption reform with the end of Funrural. Funrural is a social-security contribution and remains.
- Ignoring the export credit balance. Exporting is immune and keeps credit — the challenge is refunding the accumulated balance.
- Treating the limit as fixed. The BRL 3.6 million is updated by the IPCA (art. 167) and adds the revenues of the same producer’s companies (art. 164, § 6).
Frequently asked questions
Will the rural producer pay IBS and CBS?
It depends on size. A rural producer with annual revenue below BRL 3.6 million is not an IBS/CBS taxpayer (art. 164). Above that, it becomes a taxpayer. The producer may still elect to be a taxpayer under the regular regime (art. 165).
If the producer does not pay, does the agribusiness lose credit?
No. Whoever buys from a non-taxpayer producer takes a presumed IBS and CBS credit (art. 168), preserving non-cumulativity. The percentage is set each year by act of the Ministry of Finance and the IBS Steering Committee.
Do agribusiness exports pay IBS and CBS?
No. Exports are immune to IBS and CBS, with credits on purchases preserved. This tends to build a credit balance for the exporter, whose refund becomes a central cash issue.
Does Funrural end with the reform?
No. The reform is about consumption taxes. Funrural is a social-security contribution on rural revenue — a different tax, outside the IBS/CBS scope, and it remains.
What is the rate on agricultural products?
Unprocessed agricultural products and inputs get a 60% reduction — you pay 40% of the rate (art. 128). Vegetables, fruit and eggs are zero-rated (art. 143), as are the National Basic Food Basket items (art. 125).
Large producer: is it worth electing the regular regime?
It can be. A producer with many taxed inputs (pesticides, fertilisers, machinery) selling to companies may recover more credit by collecting under the regular regime than by staying out (art. 165). It is a case-by-case calculation.
How do cooperatives fit?
A cooperative can be a non-taxpayer when below BRL 3.6 million and made up only of individual producers below that limit (art. 164, § 5). There is also an optional specific regime for cooperative societies (arts. 271 and 272).
When do the rules start to apply?
Over the transition: full CBS in 2027 and IBS between 2029 and 2033. In 2026 the test period applies, with token rates.
Sources: Complementary Law 214/2025, arts. 125, 128, 138 and Annex IX, 143, 164 to 168 and 271–272; Constitutional Amendment 132/2023, art. 9 and art. 156-A, § 1, III (export immunity with credits preserved — LC 214, arts. 8 and 82); Law 10,925/2004 (PIS/Cofins presumed credit — predecessor); STF — RE 718,874 / Theme 669 (Funrural; historical section); reference rate ~26.5% per the Ministry of Finance technical note (SERT/MF, 2024), not set in law. Informational content; not a legal opinion.
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