This Tuesday, Minister of Economy Luis Caputo announced a new permanent reduction in withholding tax. The measure again reduces tax rates on corn and sorghum from 9.5% to 8.5%, on sunflower from 5.5% to 4.5%, on wheat and barley from 9.5% to 7.5% and on soybeans from 26% to 24%, while rates on by-products drop from 24.5% to 22.5%.
Given this new provision, a report from IERAL calculates the impact of this reduction on the 2025/26 campaign based on the four agricultural models normally used: core and extra pampa area, on owned or leased fields, with an area of 500 hectares, crop rotation of 50% soybeans and 50% corn and average yields.
The study compares two scenarios: the current one with the new reduced rates (24% for soybeans and 8.5% for corn) and a counterfactual scenario that simulates what would have happened in 2025/26 if withholding taxes had remained unchanged since the current administration took office (33% for soybeans and 12% for corn).
The difference is significant: depending on the area and the tenure regime The reduction implies an improvement in the producer’s net profitability by $38 to $76 per hectare. This results from a reduction in the overall tax burden of between 8 and 20 percentage points, depending on the case.
Despite the improvement, the tax burden will remain extremely high. For the next campaign it would be between 53% and 73% for producers in the core zone, owners and tenants, and between 67% and 123% in the extra-Pampean zone.
In practice, the producer will continue to pay more taxes than he can retain as a net margin per hectare. And in the most critical case that of the Extra Pampa tenant, the occupancy even exceeds 100%, which makes the activity directly unprofitable: even with the new tariffs, margins remain negative.
This situation shows why the continuity of the DEX reduction process is crucial for analysts. Much of the land that is currently unprofitable, particularly in areas far from ports and with lower productivity, could be reintegrated into production if a less distortive and more permanent tax system is advanced. The latest announcement goes in this direction, although the reduction is still limited and rates remain high, particularly for soybeans.
The report also measures the fiscal cost and the amount of resources the state has already returned to the sector. Based on the same counterfactual calculation applied to profitability, the forecast DEX collection for 2026 is estimated taking into account expected production and international prices.
At current rates, the collection would be about $5,030 million. If the December 2023 rates were maintained, it would be almost 7,000 million. “In other words, heThe cuts over the last two years resulted in a return of around $1,950 million for the agricultural sectorl. “The latest cut alone has an annual fiscal impact of almost 520 million, which represents a quarter of the total amount already repaid,” he analyzed.
Over the past two years, soybean share fell from 33% to 24%, while flour and oil fell from 31% to 22.5%. In all cases the decline is around 8 to 9 percentage points Implies cuts in the order of 27%.
According to the Rosario Stock Exchange, with the announced reduction in withholding taxes, the permanent rate of the soybean complex, the sector that generates the most dollars, is at its lowest level in almost 19 years (not counting the temporary suspension of withholding taxes in September).
The reductions are also important in grains: corn and sorghum fall from 12% to 8.5%, while wheat and barley show larger declines from 12% to 7.5%, a decrease of 37.5%. For sunflowers, the rate drops from 7% to 4.5%, a decrease of 2.5 points, a relative adjustment of 35.7%.
The analysis shows that a significant portion of the lower income comes from withholding taxand automatically reimbursed through profits, VAT, gross income and other taxes related to economic activity, Given that the manufacturer faces multiple and cumulative tax burdens beyond the DEX. However, the fiscal effort falls almost exclusively to the state treasury, while a large part of the taxes that increase due to the greater economic dynamism can be shared.
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