Taxes on Livestock in Brazil
The tax variation from state to state might be a bit confusing for people selling cattle in Brazil. This article will bring an overview of these variations, exemptions and how the taxation work in Brazil.
Anyone that does business in Brazil is probably aware of the complex Brazilian tax system. There are federal taxes, which are collected by the federal government and applied equally throughout the country.
There are also state and municipality taxes that vary according to location. Not only the tax rate is variable, but also the criteria to define how much is charged and what can or cannot be taxed. Since many producers sell cattle to companies outside their state, it is necessary to be aware of those variations.
Collection of ICMS
Tax variations are common especially regarding the Tax on Circulation of Goods and Services (ICMS). Each state has its own ICMS regulation, which also defines tax exemptions.
As a common rule, there is a 12% ICMS rate for the circulation of cattle in Brazil. However, this rate can be lowered to 7% if the products leave the southern or southeastern regions to supply the northern, northeastern, and midwest regions, as well as the state of Espírito Santo.
The calculation basis for these rates vary a lot depending on the location. They are usually calculated on the transaction value involving cattle, but minimum values are set in each state.
These minimum values take different characteristics of the animals in consideration, like breed, age, and weight, as well as the activity which the sold cattle is being destined — slaughter or fattening. All of these factors are listed in tables published by each state, known as pautas.
In Tocantins, for example, the animal’s age, gender, and breed defines the minimum calculation basis to be used. For the sale of a male bovine, between 25 and 36 months, of the Girolando breed, the amount of BRL 2.054,51 is considered the minimum value. However, in the state of Amazonas there are less specifications: the only criteria are the animal gender and if it is a calf or an adult.
General Tax Exemptions
The sale of cattle in Brazil is exempt of some taxes, no matter which states are involved in the transaction. Companies and rural cooperatives do not need to pay PIS and Cofins when selling cattle, leather, meat and derived products.
In addition, there is currently an ICMS exemption for the circulation of cattle involving specific states. This measure was taken due to the drought in some Brazilian regions during the past few years, enabling producers to feed their cattle in areas that were not affected by bad climatic conditions. This measure is valid until the end of 2014, but specialists predict that it might be extended.
This ICMS exemption is valid for the circulation of cattle between the states of:
- Bahia
- Espírito Santo
- Minas Gerais
- Sergipe
- Tocantins
Also, most states exempt of ICMS from operations between two parties located in the same state. This is valid only for the circulation of livestock, not for bovine meat.
Specific Exemptions
Each state can also exempt producers from paying ICMS in different cases, but there is no standard in this sense: some might choose to simply exempt the sale of a certain breed, while others may exempt the circulation of calves. It is necessary to check the rules of each state in their respectively ICMS regulations or consult the State Treasury Office.
Some examples of specific exemptions relating to cattle are:
- In Minas Gerais, transactions involving purebred cattle and cows of the Girolando breed are exempt from paying ICMS
- In Santa Catarina, cows, oxen and buffaloes older than 24 months are exempt
- In Goiás, cows of the Girolando breed and purebred, pure by crossing or livre vacum cattle are exempt