Analysis: New tax reform in Brazil lowering VAT for essential goods leaves out pet food
The local industry has called for officials to impose a balanced tax burden for a growing category. GlobalPETS has the details.
The Federal Government sanctioned a new tax reform in Brazil regulating consumption taxes in mid-January after being approved by Congress at the end of 2024.
One of the most relevant provisions of the new tax model is the adoption of tax reductions for essential goods and services ranging from 0 to 60%, depending on the case. Despite the efforts of the local pet industry, President Luiz Inácio Lula da Silva’s government didn’t include pet supplies on the list.
“It is not an exaggeration to say that the result is far from ideal for the sector,” José Edson Galvão de França, Executive President of Abinpet and Member of the Board for the Instituto Pet Brasil, says to GlobalPETS.
“The tax reform brought a reduction in the burden for some products that are raw materials for animal feed, such as animal proteins, and some items that are part of the Brazilian basic food basket, such as cereals,” he adds, noting that it “did not include the value-added products produced by us.”
Industry insiders also warn that not including pet food in the categories that can enjoy a tax reduction can hinder families’ access to pet food and increase the offering of human food scraps to pets.
It is believed that for every R$1 ($0.17/€0.16) consumers spend on pet food in Brazil, about R$0.50 ($0.09/€0.08) is in taxes.
A balanced tax burden
The pet industry in the Latin American country has been aiming to change this to mirror that of other major markets. In the past year, Abinpet and the Instituto Pet Brasil have been working to raise awareness with the Chamber of Deputies (Câmara dos Deputados) and the Executive Branch about the importance of significantly reducing the tax burden for pet products.
Last year, Abinpet also presented an economic study to Congress and the Federal Government, highlighting the benefits that tax exemption for the sector would bring.
“The US and the EU do not differentiate taxation between human and pet food, which corrects tax distortions and prevents pets from being fed table scraps,” states De França.
It is believed that Brazil produced 4.2 million tons of pet food in 2024, which could potentially exceed 9 million tons in the coming years.
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