VAT cut for electricity used in agro-industrial irrigation: what changes and who benefits

The recent enactment of Law 27,802 introduces a significant change for the agro-industrial sector by modifying the tax treatment applied to electricity used in irrigation systems. Through Article 189, the law amends Article 28 of the VAT Law, incorporating a new provision that establishes a reduced 10.5% rate for electricity consumption specifically used in agro-industrial irrigation activities.

The measure was published in the Official Gazette on March 6, 2026, and will come into effect in April 2026, starting from the first day of the month following its entry into force. Its main objective is to reduce one of the key operating costs for agricultural activities that rely on electric irrigation systems.

Until now, electricity used for agro-industrial irrigation was generally taxed at a 27% rate. With this modification, producers using electricity for irrigation will benefit from a significantly lower tax burden, directly impacting energy costs.

The scope of the measure is nationwide and applies to all producers using electric irrigation systems within agro-industrial activities, regardless of their location. This includes a wide range of regional economies and intensive production systems that depend on continuous energy use for water management.

In summary, the measure reduces the tax burden on a key input such as electricity, aiming to improve production conditions across the agro-industrial sector nationwide. Its effects are expected to begin appearing in electricity bills starting in April 2026, when the new tax rate becomes effective.