Paw-sitive Outlook for the Pet Food Industy in Brazil - Tax Challenges and Tax Reform
Report Number: BR2024-0015 Date: June 27, 2024 Country: Brazil Prepared By: USDA FAS Foreign Agricultural Service Source: [USDA GAIN Report](https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Paw-sitive+Outlook+for+the+Pet+Food+Industy+in+Brazil_Brasilia_Brazil_BR2024-0015.pdf)
Tax Challenges and Tax Reform
Challenges for the Pet Industry Tax Burden When compared to other countries, the pet products industry in Brazil is heavily impacted by taxes. Brazilian companies pay up to 51 percent in taxes, whereas in Europe the tax is about 19 percent, and in the United States, seven percent. In a recent trip to Brazil, representatives from the Pet Food Institute (PFI) commented on this issue as a challenge for U.S. exporters as well. In Brazil, pet food falls under the category of a luxury good resulting in a heavier tax. There are different bill proposals in Congress and at some state-level legislative branches proposing decreases in pet food taxation. In an official statement, a Minas Gerais state congressman stated that “Feed is essential to the life of the animals, it is their food”, and therefore not a luxury item. The congressman also noted that for low-income families affording pet food can become a financial burden. The overall inflation considering all sectors of the economy in Brazil in April 2024, cumulative in 12 months, according to the Institute of Geography and Statistics (IBGE) was close to four percent. Pet food inflation in Brazil in April 2024 had an overall increase of two percent in the same period. However, in some cities in the Northeast the increase was even larger, as demonstrated by the below graph. The cumulative pet food inflation in Salvador, Bahia state, was the largest in country, reaching nine percent.
Figure 3 Pet Food Inflation – Cumulative in 12 months, reference month April 2024
Brazilian Tax Reform and Implications to the Agricultural Sector
On July 7th, 2023 the Brazilian Chamber of Deputies approved a major tax reform in an attempt to simplify the Brazilian federal and state tax codes. The idea is that the federal, state, and local taxes – which often overlap – will be replaced by a simplified value added tax (VAT). The bill was promulgated on December 21, 2023, and the government had 90 days to propose draft bills to fully implement the reform. The agricultural sector was concerned about the measure, as it currently benefits from certain tax exemptions that slated to be removed with the establishment of the VAT. The food sector is also participating in the negotiations for the implementation of the reform. Abinpet has requested that pet food be considered for tax breaks in the tax reform. The objective is for animal and human food to be granted the same taxation treatment (reduction of 60 percent of taxes) or full exemption, as both are a basic need, rather it be for humans or animals. If this comes into fruition, it could have a potential positive impact on exports, as prices would be decreased.
Source
USDA GAIN (Global Agricultural Information Network) Original source: USDA Foreign Agricultural Service
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*Last updated: 2026-07-18*