Brazilian court suspends law to cut tax breaks for companies committing to soybean deforestation Reuters
SAO PAULO/BRASILIA (Reuters) – A judge at Brazil’s top court on Thursday suspended a law by the country’s top soybean producer that would have ended tax breaks for companies following an agreement not to buy soybeans from cleared areas of the Amazon (NASDAQ: ) rainforest.
Judge Flavio Dino suspended the law from the western state of Mato Grosso on January 1 until the court makes a final decision.
WHY IT’S IMPORTANT
Brazil is the world’s largest producer and exporter of soybeans, and Mato Grosso is the country with the largest producer.
The “Amazon Soy Moratorium” accord, hailed by scientists and conservationists, was voluntarily signed by global commodity giants in the mid-2000s, pledging to stop buying soy from farms in rainforests that were cleared after 2008.
Under Brazilian forestry rules, landowners in the Amazon can clear up to 20% of their property. But the increase in deforestation in the early 2000s prompted calls for action from companies that feared a larger ban.
KEY QUOTATIONS
Dino wrote that the state law “seems like a violation of free enterprise principles” because it creates an uneven playing field for companies that voluntarily choose to abide by the agreement.
He also said the law “presents signs of abuse of purpose, as it uses tax rules as a punitive instrument.”
ANSWER
Mato Grosso will appeal the decision, Governor Mauro Mendes said in a video posted on his social media accounts on Thursday.
He said that if the appeal is not accepted, further measures will be taken.
“We cannot accept that companies, domestic or foreign, come to Brazil and make demands that are not in Brazilian law,” he said.
ADDITIONAL CONTEXT
Earlier this month, soybean farm lobby Aprosoja-MT, based in Mato Grosso, formally asked Brazil’s watchdog CADE to lift the moratorium, saying it encourages a “purchasing cartel” and harms farmers who strictly adhere to South America’s national forestry code.
