December 2, 2014

Ag Machinery in Brazil must be Licensed starting in January of 2015

Over the vehement objections of the farming community, the controversial new law requiring Brazilian farmers to pay a tax and obtain license plates for their agricultural equipment will take effect on January 1, 2015. The new law will impose a tax and require license plants for tractors, combines and other equipment that was manufactured starting in August of 2014. Equipment manufactured before that date will not require the license plates or be liable for the tax.

Farm organization opposed to the new legislation contend that the machinery covered by the new legislation rarely travels on the highways of Brazil and certainly should not be treated equal to passenger vehicles, trucks, or buses. They contend that the new legislation will greatly increase costs for farmers and that they have no way to pass along the costs and that the agricultural sector is being unfairly targeted by the new legislation.

Opponents contend that the entire issue will be revisited by the new Brazilian Congress in January, but for the time being it will take effect on January 1st.

The license and the 3% IPVA tax on the value of the equipment is expected to cost farmers R$ 1,000 to R$ 5,000 per machine (US$ 400 to US$ 2,000). There are 10,000 to 12,000 units of agricultural machinery manufacture per year in Brazil that would be required to pay the tax and obtain a license

Adding to the confusion surrounding the new legislation is the fact that there has not been any time frame indicating when the license plates must be obtained or the tax paid.