The Government of the State of São Paulo issued Decree No. 70.674/2026, correcting a change that could have had serious consequences for the state’s agricultural machinery and equipment industry.
Decree No. 70.589/2026, enacted in May of this year, had revoked paragraph 3 of Article 12 of Annex II of the São Paulo ICMS Regulations (RICMS/SP), a provision that eliminated the requirement for proportional reversal of ICMS credits related to transactions benefiting from a reduced tax base.
In practice, the revocation reduced the effectiveness of the nominal benefit, as taxpayers maintained the reduction on output transactions but were required to reverse a significant portion of their input credits, thereby substantially increasing the effective tax burden.
The new decree corrects this issue by adding paragraph 4 to the same article, expressly providing that proportional reversal of credits will not be required for transactions benefiting from the reduction.
The changes introduced will have retroactive effect as of May 1, 2026.
