Agribusinesses push to maintain tax exemption for receivables due to tariffs

Brazil’s agribusiness industry is advocating to maintain the tax exemption on agribusiness receivables certificates (CRAs) amidst proposals to impose a 5% income tax, as outlined in Bill 1,303 set to take effect in 2026. Industry stakeholders are also lobbying for increased flexibility in the use of funds generated through CRAs.

The urgency of this advocacy heightened following the imposition of hefty tariffs on Brazilian exports by U.S. President Donald Trump, impacting sectors like beef, seafood, and coffee production while potentially increasing the credit needs of the agribusiness segment.

In Brasília, Federal Deputy Arnaldo Jardim, Vice President of the influential agribusiness caucus (FPA), has been at the forefront of discussions with producers and corporations. Mr. Jardim emphasized the caucus’s disapproval of taxing currently exempt financial instruments, emphasizing that it would escalate the cost of capital, with a cascading impact. The caucus is actively combatting these proposed taxations.

Conversations within the government have suggested alternative measures to offset the removal of tax exemptions, including potentially raising the requirement for agribusiness credit bills (LCAs) to allocate a higher percentage of funds towards rural credit operations or purchasing agribusiness securities. However, no formal proposal has been put forth as yet.

One option under consideration involves maintaining tax exemptions for individual investors in CRAs and real estate receivables certificates (CRIs) while directing taxes towards LCAs and real estate credit bills (LCIs). The growth of capital market financing for agribusiness has been on an upward trajectory. CRAs and agribusiness investment funds (Fiagros) represented 31% of Brazil’s total rural credit in 2024, a significant increase from 19% in 2021, according to data from B3 and the Securities and Exchange Commission of Brazil (CVM).

Securitization firm Vert’s partner, Victória de Sá, highlighted the essential role of capital markets in complementing mandatory rural credit and producers’ private capital, underscoring the sector’s dependence on these financial mechanisms for growth and sustainability. Investor interest in agribusiness financing via capital markets has surged, outpacing overall capital market growth between 2022 and 2024.

Despite stricter eligibility criteria imposed by the National Monetary Council (CMN), CRA issuances witnessed a notable 60% increase, totaling R$153.5 billion by December 2024. Though 2025 has seen a dip in CRA issuances compared to the previous year due to economic challenges and regulatory constraints, about 90% of the funds raised through CRAs are directly channeled into agricultural production, with a significant portion allocated to crop and livestock operations, commercialization, processing, and industrialization.

This unequivocal lobbying effort spearheaded by the agribusiness sector underscores the critical role of CRAs and other financial instruments in sustaining the growth and development of Brazil’s agricultural economy.