The increased tax burden resulting from the reduction of PIS and COFINS tax incentives and benefits in sectors such as agribusiness is already being challenged in court, with rulings in favor of taxpayers.
What is being challenged is not the taxation itself of purchases of goods and services linked to transactions previously subject to a zero rate or exemption from PIS and COFINS, as provided for in Complementary Law – LC n.º 224/2025. The debate centers on the prohibition of credits in the next stage of the supply chain.
With the resumption of taxation, the prohibition on tax credits undermines the logic of non-cumulative taxation by maintaining the economic burden in the chain without compensation. This structure also raises doubts regarding the reasonableness of the measure and the transparency of the tax system, as it makes it difficult to perceive the actual impact of the tax burden throughout the stages of circulation.
We highlight 3 points of attention:
1. Identification of benefiting transactions: Companies need to identify which transactions benefited from PIS and COFINS exemptions or zero rates. Among the main sectors, we highlight agribusiness, which benefited particularly in the fertilizer and fertilizer raw materials chain, as well as agricultural pesticides, seeds and seedlings for sowing and planting, and agricultural inputs, as provided for in Law n.º 10.925/2004.
2. Impact of LC nº. 224/25: The reduction in the benefit is implemented by applying a rate equal to 10% of the standard tax system rate. For contributions to PIS/Pasep and Cofins, the following rates apply to revenue: a) 0.65% and 3%, under the cumulative calculation regime; or b) 1.65% and 7.6%, under the non-cumulative calculation regime.
3. Effective date of LC nº 224/25: This Complementary Law took effect this year, on January 1, 2026, and must be observed by taxpayers until a court decision to the contrary is issued. For this reason, companies impacted by the prohibition on tax credits have sought to file lawsuits to obtain preliminary injunctions ensuring their right to calculate, claim, and offset credits related to transactions that have become taxable.
In practice, the prohibition on tax credits may lead to economic cumulative taxation and increase the tax burden to a level exceeding the percentage reduction in the tax benefit announced by the legislature.
This was precisely the rationale adopted in the judicial decision of the Federal Regional Court of the 4th Region, which recognized, in a preliminary analysis, a potential violation of the principles of non-cumulative taxation, reasonableness, and transparency of the tax system.
Since the legislation remains in effect and takes effect immediately, it is essential to assess the financial impacts and the feasibility of legal actions to protect the right to tax credits, especially in light of the first preliminary injunctions granted in favor of taxpayers.
