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News from PKF Brazil • 2019-01-30

Government of São Paulo zeros ICMS of fruits, vegetables and packaged vegetables

On Tuesday (29), Governor João Doria signed a decree exempting the Tax on Transactions of Goods (ICMS) of horticultural products, extending the benefit to fruits, vegetables and vegetables that are packaged or cooled, even if they have been cut or stripped.

The authorization was given by the National Council of Finance Policy (Confaz), through the Agreement ICMS-21/15, and became possible after approval of Draft Law no. 787/2017, by Deputy Estevão Galvão. The decree will be published in the Official Gazette of the State and the exemption will be valid as of February 1, 2019.

Of great importance to the industry, the decree answers the lawsuit of producers and distributors who carry out operations within the State of São Paulo and collect the ICMS at a rate of 18%, or reduced to 12% when made by

Already for operations with other units of the Federation, the sector used rates of 7% (for the North, Northeast, Midwest and Espírito Santo) or 12% (South, Southeast, except for Espírito Santo). And 4% in the case of imported merchandise.

The ICMS exemption applies to horticultural operations detailed in article 36, Annex I of the ICMS Regulation, such as pumpkin, lettuce, potatoes, onions, spinach, bananas and papayas, among others. These products may be grated, cut, chopped, sliced, turned, peeled or defoliated.

The vegetable sector is what most generates direct jobs in the primary chain: they are up to 25 people per hectare, in fixed or temporary work. The value of agricultural production in São Paulo in 2018, according to data from the State Department of Agriculture and Supply, was about R $ 74 billion.

Of this total, approximately 15% represents income from the production of fruits and vegetables. According to sector estimates, at least 50,000 São Paulo farmers will benefit from the tax relief.

For the governor, the measure is one of the ways in which the de-bureaucratisation of the state can foster economic activity: "There are at least 18% of useless and inadequate taxes. Unfortunately, over the years, several producers were penalized precisely because they were doing the right thing, cleaning, washing and packing their produce, but having to pay more taxes and making fruit and vegetable prices more expensive in supermarkets. From now on, São Paulo gives this good example that reduces the price of food to the consumer at all levels. "

Doria said other tax relief measures could be taken in 2019, especially for the food and hygiene and cleaning sectors. However, the governor expects immediate counterparts from the private sector, such as falling consumer prices for items that will be discharged.

"Actions of this nature are likely to be repeated throughout the year. Less bureaucracy, less taxes, more motivation for producers and distributors, and thus generating more jobs and income, and by generating income and more jobs, we generate more taxes and the state also fulfills its social objective, "concluded Doria.

The state secretary for Agriculture and Supply, Gustavo Diniz Junqueira, also spoke about the importance of the act for producers in São Paulo: "The decree signed today is in line with the proposal to encourage the producer to add value to his product to increase revenue. We are repairing an injustice with the farmer who has entrepreneurial spirit, and encouraging those who did not care about presenting their products to do so in order to earn more. "

The products contemplated are detailed in article 36, Annex I of the ICMS Regulation, items I to VIII and X to XII, as set forth below:

  1. Squash, zucchini, chard, watercress, celery, celery, artichoke, rosemary, lettuce, alfavaca, lavender, almeirão, dill, anise, arrowroot, rue and azedim;
  2. Burdock, potatoes, sweet potatoes, eggplant, carrot, beet, broccoli and sprouts of vegetables used for human consumption;
  3. Caceteira, cambuquira, chamomile, caramel, thistle, catalon, onion, chives, carrot, chicory, chuchu, coriander, mushroom, cumin, cabbage and cauliflower;
  4. Endive, lemongrass, holy maria herb, fennel, pea, endive, asparagus and spinach;
  5. Fennel, flowers and fresh fruits, except almonds, hazelnuts, nuts and nuts;
  6. ginger, mint, yam, jiló and losna;
  7. Macaxeira, manioc, basil, marjoram, maxixe, green corn, moranga and mustard;
  8. turnip and turnip;
  9. Palm hearts, cucumbers, peppers and peppers;
  10. okra, radish, strong root, cabbage, Chinese cabbage, arugula, rhubarb, parsley, celery and savory;
  11. Taioba, tampala, tomato, thyme and pod.
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