Change in the tax on seed companies could make agricultural production cheaper
With the implementation of transgenic seeds, seed producing companies began to charge royalties by technology (property rights for the realized invention). But the seeds, before reaching the hands of the rural producer, pass through an intermediary, the so-called sowers. These companies multiply the seeds and sell them to rural producers for an amount in which the royalty cost is already included in their price. In the case of seeds, between 30% and 50% of their value was paid to the holder of the patent right.
According to the author of the bill, deputy Sérgio Souza (MDB-PR), the proposal seeks to avoid double taxation due to an understanding of the Federal Revenue that taxes charged from seed multiplying companies are levied on the total value of the price of sales. He explains that the amount paid in royalties must be deducted from the calculation base for Corporate Income Tax and Social Contribution on Net Income (CSLL).
“We suggest an amendment to the law that regulates the Corporate Income Tax legislation, saying that, in this case, the seed multiplier should not collect on this value of the royalties income tax and contribution, because if there is no double taxation. It’s not even his income. In this part of royalties, he is merely a collecting and forwarding agent. He doesn’t get paid for that, he gets paid for the value of the seed that he multiplied, but not for the embedded technology”, he explains.
For the president of the Brazilian Association of Soy Seed Producers (ABRASS), Gladir Tomazelli, the project is important because it strengthens legal security in the sector.
“The biotechnology breeder, the seed multiplier, the farmer, all need to have legal security to be able to carry out their work and use the available tools, as is the case with biotechnology. So, this PL comes to further strengthen the need to have legal certainty ”, he emphasizes.
Understand taxation royalties
The legislation that focuses on transactions involving the payment of royalties and its taxation by income tax was instituted in the 1950s, as a response to the fear of evasion of the country’s currency in remittances of payments abroad.
Over the years, an interpretation was developed that seed multipliers should also pay Corporate Income Tax and Social Contribution on Net Profits (CSLL) on the total value of their commercialization, without discounting the amount paid in royalties, which makes the product more expensive. Deputy Sérgio Souza also points out that the bill that proposes the discount of this value by the multiplying companies should contribute to the reduction of costs for the rural producer.
“The first benefit we have is a reduction in the cost of this input for the rural producer. The second benefit is that this will encourage Brazilian companies to develop new technologies because there is no such tax on remittances abroad, but when you pass this on to Brazilian companies that own national technologies, then you have this double taxation. And there is also, in an indirect way, an incentive to the national industry in the sector”, he says.
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