Since February 1st, São Paulo has reduced the ICMS rate on packaged fruits, vegetables, and herbs to 0% which should bring down the consumer prices.
Abadoning Double Taxation
The reason for the reduction was the double taxation on said produce because the ICMS tax was levied both on the foods as well as on their packaging. The ICMS exemption is valid for fruits and vegetables such as pumpkin, salad, potatoes, onions, spinach, bananas and papaya. The ICMS exemption applies if the products are cut and washed as long as they are not cooked and no other (conservation) products are added.
During the signing of the bill Governor João Doria said today that the measure was aimed at reducing bureaucracy while furthering economic activities by reducing the “useless tax” by 18%. Furthermore, he declared that the government was going to introduce further steps in that direction.
The new regulations is particularly relevant because the produce sector offers the most direct jobs in the primary production chain. According to the government, the agricultural revenue of São Paulo mad up 74 Billion R $, 15% of them within the fruits and vegetables production segment.