Law No. 14,932/2024 modifies documents required to determine the ITR taxable area

On July 24, 2024, the Federal Government published Law No. 14,932/2024, which provides for (i) the possibility of submitting the Rural Environmental Registry (“CAR”) in order to calculate the taxable area and reduce the Tax on Rural Territorial Property (“ITR”), and (ii) the mandatory submission of the Environmental Declaratory Act (“ADA”) in order to reduce the value of the ITR.

The tax legislation (Law No. 9,393/96 and Decree No. 4,382/02) establishes that calculating the ITR involves assessing the taxable area of the rural property, which corresponds to its total area, except for:

• permanent preservation areas;
• legal reserves;
• private natural heritage reserves;
• forest conservation easements;
• areas of ecological interest for the protection of ecosystems, declared as such by an act of the appropriate federal or state body, and which increase the restrictions on the use of permanent preservation areas and legal reserve areas;
• areas that are proven to be unsuitable for rural activity, declared to be of ecological interest by an act of the appropriate federal or state body;
• areas covered by native, primary, or secondary forests at a medium or advanced stage of regeneration; and
• areas flooded to form reservoirs for hydroelectric plants authorized by the government.

The CAR, established by the Forest Code, is an electronic self-declaratory registration mandatory for all rural properties. It aims to integrate environmental information on rural properties and possessions, forming a database for control, monitoring, environmental and economic planning, as well as combating deforestation. Thus, the option to submit the CAR tends to facilitate the calculation of the taxable area in the ITR since all the areas excluded from taxation, if they exist on the rural property, must be included in the CAR.

In turn, the ADA, established by the National Environmental Policy, requires the registration with the Institute for the Environment and Renewable Natural Resources (“IBAMA”) of rural property and its areas of environmental interest to reduce or exempt ITR on these areas. Eliminating the obligation to submit the ADA seems to simplify the procedure for calculating and paying the ITR since it is not necessary to submit an additional document to the CAR in order to calculate the taxable area.

However, it is worth noting that Law No. 14,932/24 did not repeal other provisions that impose the same obligation to submit the ADA. As these provisions have not been expressly repealed, one would assume that such repeal would have been tacit if Law No. 14,932/24 had established that the submission of the ADA was no longer mandatory, but it was not.

Therefore, we understand that the ADA must be filled out annually when submitting the ITR declaration, under the terms of the IBAMA’s Normative Instruction (“IN”) No. 05/2009 until there is an express statement from the responsible authorities, notably IBAMA, the National Institute for Colonization and Agrarian Reform (“INCRA”) and/or the Brazilian Federal Revenue Service (“RFB”), waiving the need to submit the ADA.

Law 14,932/24 thus facilitates the ITR declaration process since submitting the CAR can simplify this process for taxpayers. In addition, repealing the obligation to submit the ADA could reduce the bureaucratic burden of declarations. However, as other provisions regarding the ADA have not been repealed, its completion and submission are not expressly dispensable, at least until the authorities formally notify taxpayers.

Taxpayers must be aware of the recent changes and seek advice on complying with tax and environmental obligations, thus ensuring that properties remain in good standing.

Demarest’s Environmental, Tax, and Real Estate teams are available to assist partners and clients and provide any further clarifications that may be necessary.