Tax on tax Rural Land Properties in Brazil
Brazil has a specific tax charged on properties located in rural areas of Brazil, which is known by the acronym ITR. In this article we will learn more about this tax what the rates and cases of exemption for this tax are.
In Brazil there are several taxes charged on properties and ITR is one of them. The acronym stands for Imposto sobre Propriedade Territorial Rural which translated is Tax on Rural Land Property. As the name indicates, this tax is charged on the ownership of rural areas in the country. Both Brazilians and foreigners alike, who are owners of rural properties located in Brazilian territory are obliged to pay ITR, save a few exceptions that we will discuss further.
Tax Declaration and Collection
Unlike the Tax on Urban Property (IPTU), which is defined by the municipalities, it is the landowner’s responsibility to provide the information and calculate the ITR. In this case it is up to the authorities to check whether the statement is correct.
The annual statement of ITR is called Declaração do Imposto sobre a Propriedade Territorial Rural, which translated to English is the Declaration of Rural Property Tax, also known by the acronym DITR. The DITR, is a set of documents corresponding to each rural property consisting of the following documents:
- DIAC, which is short for Documento de Informação e Atualização Cadastral do ITR, which contains information regarding the ownership of the property and about the property itself
- DIAT, short for Documento de Informação e Apuração do ITR, which is the document that will contain the calculation of the tax
The DITR must be completed online, through the use of the Receitanet software, available on the Federal Revenue Service website.
What are the rates?
Generally speaking, the rate to be used for calculating ITR varies according to the area of the property and its utilisation. The calculation basis for ITR is the taxable value of bare land, known by the acronym VTNT, which stands for Valor da Terra Nua Tributável, and its level of use, called in Portuguese Grau de Utilização or GU. The GU is the percentage of the land used for rural activities in relation to the total area of the property. The bases for ITR is the land size but the calculation table favours high utilisation grade with a lower tax rate. The table used to determine the ITR rate is below, it was last updated in June 2016:
| Total area of the property in hectares | GU | ||||
| Up to 30% | Above 30% up to 50% | Above 50% up to 65% | Above 65% up to 80% | Above 80% | |
| Up to 50 | 1.00 | 0.70 | 0.40 | 0.20 | 0.03 |
| Above 50 up to 200 | 2.00 | 1.40 | 0.80 | 0.40 | 0.07 |
| Above 200 up to 500 | 3.30 | 2.30 | 1.30 | 0.60 | 0.10 |
| Above 500 up to 1 000 | 4.70 | 3.30 | 1.90 | 0.85 | 0.15 |
| Above 1 000 up to 5 000 | 8.60 | 6.00 | 3.40 | 1.60 | 0.30 |
| Above 5 000 | 20.00 | 12.00 | 6.40 | 3.00 | 0.45 |
The due ITR is the amount resulted from the VTNT multiplied by the corresponding factor above. As we have seen, the owner is responsible for measuring their property determining its level of use and the value of bare land.
Definition of Bare Land and Taxable area
Bare land, known as VTN is the property of nature or natural accession, comprising the land with its surface and its native forest, natural forest and natural grassland. Level of use is a percentage calculated of the area actually used for rural activity and the total area of the property.
The value of bare land is the market value of the land, excluding amounts related to:
- Buildings, facilities and improvements
- Temporary and permanent crops
- Cultivated and improved pastures
- Planted forests
The VTN reflects the market price of land, determined on January 1 of the year they refer to in the DITR, and will be considered self-assessment of bare land at market price.
The taxable area is defined as the total area of the property minus the following areas:
- Permanent preservation areas
- Legal reserve area
- Natural heritage private reserve
- Conservation easement areas
- Areas of ecological interest and protection of ecosystems
- Areas proved to be unusable for rural activities and declared as land of ecological interest
- Areas covered by native forest, with a medium or advanced stage of regeneration
- Areas flooded to become hydroelectric dam reservoirs
The VTNT is calculated using the following equation:
VTNT = VTN X (taxable area / total area of the property)
Exemptions and applicability
There are a few cases where properties are exempt or immune to the ITR.Immunity and exemptions apply to properties that are explored by the owner or their family, when it is the only property in their ownership.
To be considered as immune, the size of the property considered as small rural property differs according to its geographic location:
- 100 hectares for property located in the municipality located in the Western Amazon or the Pantanal areas both in the states of Mato Grosso and Mato Grosso do Sul
- 50 hectares for property that is located in the municipality located in the Polígono das Secas or in Eastern Amazon regions
- 30 hectares for property located in any other municipality
Rural landowners are also exempt from collecting ITR when:
- Rural properties are comprised in official land reform programmes: these properties are defined by competent authorities as settlements, and meet some requirements regarding the size and usage
- The total number of rural properties with the same owner, is below the limits of hectares stated above, if the owner explores the land alone or with their family