Feb 20, 2026 .

Brazil Valuation Standards (ABRASV 2026) Guide

Neeraj Agarwal

I Neeraj Agarwal, am a Fellow Member of ICAI, practicing under the banner of M/s AAN & Associates LLP, a firm based out of Banglore Mumbai.
I am also registered under Insolvency and Bankruptcy Board of India as a Registered Valuer for valuation of Security or Financial Assets (Passed in Feb 2020)
I am also holding Bachelor of Commerce (B. Com) degree from Calcutta University (Passed in 2011).
I have corporate working experience in Wipro. After working in Wipro for a short period I started my practice in late 2013 and have been in practice so far for the last 10 years. I have also completed a Certificate Course by ICAI on IND-AS in 2020. I have also cleared Social Auditor Exam conducted by NISM.
I have been inducted as a Special Invitee to the Sustainability Reporting Standard Board, ICAI for the FY 2023-24.

In a globalized investment landscape, standardizing valuation frameworks is essential — especially for jurisdictions grappling with exchange volatility and sector specificity. The Brazilian Valuation Standards (ABRASV 2026) represent Brazil’s evolving response to Foreign Direct Investment (FDI) valuation challenges, particularly in commodity-intensive sectors such as agribusiness and mining. While the International Valuation Standards (IVS) provide a globally recognized foundation, ABRASV introduces distinct guidance tailored to Brazil’s economic regime, tax architecture, and macro-cyclical exposure to commodity price cycles and exchange rate movements.

This article unpacks the core features of ABRASV 2026, contrasts them with IVS, and examines practical valuation implications — including Brazilian Real (BRL) fluctuation, sector-specific modeling, and the potential influence of tax reforms analogous to the U.S. Tax Cuts and Jobs Act (TCJA).

1. Context: Why a National Standard?

Brazil’s economy is deeply integrated with global commodity flows:

Agribusiness accounts for a significant GDP share and export receipts.
Mining output, especially iron ore and base metals, drives corporate earnings and FDI inflows.

However, valuation complexity arises from:

BRL volatility is driven by global risk sentiment and local fiscal policy.
Tax reform dynamics, as Brazil continually adjusts its fiscal regime.
Global investment norms, where FDI valuations are benchmarked against frameworks like IVS.

ABRASV 2026 seeks to bridge international comparability with domestic economic realities.

2. Key Structural Elements of ABRASV 2026

Objective and Scope

ABRASV 2026’s core objective is to standardize valuation methodologies in Brazil with a focus on:

Fair Value measurement for accounting and capital market purposes
Valuations used in cross-border M&A and FDI negotiations
Asset-based valuations in regulated sectors

In contrast, IVS is normative in principle but global in application — it does not prescribe detailed country risk adjustments or jurisdictional tax impacts. ABRASV 2026 supplements IVS language with Brazil-specific guidance.

Exchange Rate Treatment — A Signature Differentiator

One of ABRASV’s most distinctive contributions is its framework for incorporating BRL volatility.

Instead of static FX assumptions, ABRASV recommends scenario-based stochastic modeling for BRL, particularly in long-dated cash flows.
This contrasts with IVS, which permits currency risk but does not standardize how to integrate exchange volatility systematically.

For agribusiness/mining valuations:

ABRASV suggests overlaying commodity price curves with BRL stochastic paths to reflect the dual exposure (commodity + exchange).
The recommended approach uses Monte Carlo simulation with joint distribution mapping — a method seldom spelled out in IVS.

Country Risk Premium and Discount Rates

ABRASV allows a Brazil-specific risk premium enhancement above base global discount rates.

In practice:

A global CAPM discount rate is first calibrated per IVS.
ABRASV mandates an explicit country risk premium adjustment tied to sovereign credit spreads + forward-looking macro expectations.

This yields higher risk-adjusted discount factors in practice — especially when compared with U.S. or European valuations.

IVS only prescribes theoretical acceptance of country risk premiums — it doesn’t define the magnitude or formula.

3. Commodity Sector Modeling: Agribusiness vs Mining

Both sectors share commodity exposures, but the valuation challenges differ:

Agribusiness

Revenues are seasonal and tied to crop cycles and export logistics costs.
ABRASV requires point-in-time harvest cycle analysis, which is not emphasized in IVS.

For example, valuations may segregate:

Planting	Input cost models tied to global fertilizer and fuel price curves
Harvest	Spot commodity futures pricing adjusted for logistics and export duties
Storage	Contango/backwardation impacts on net cash flows

IVS would allow similar segmentation, but without mandatory structural treatment.

Mining

Mining valuations are highly capital-intensive and rate-sensitive.

ABRASV includes:

Resource depletion schedules
Commodity price forecasts with BRL overlay
Regulatory risk adjustments (e.g., royalty changes, export taxes)

These factors elevate discount rates due to jurisdictional exposure.

IVS requires fair value estimation, but again, ABRASV forces quantitative incorporation of these components.

4. Tax Reform Considerations — A Brazilian TCJA Parallel?

To understand the implications of tax reform for valuation, consider the U.S. Tax Cuts and Jobs Act (TCJA), which recalibrated discount rates and after-tax cash flows through reduced corporate rates and altered amortization rules.

Brazil has been evaluating similar reforms:

Shifts from corporate-based taxes to turnover or value-added taxes
Potential credit allowances for invested capital

ABRASV 2026 incorporates tax scenario analysis:

Explicit modeling of effective tax rates under alternate regimes
Use of forward effective tax rate curves rather than static historical statutory rates

In contrast, IVS considers taxation as part of “market participant assumptions“, but does not mandate scenario frameworks.

This has real valuation impact:

Lowering effective tax rates boosts after-tax cash flows and enterprise value.
But increased tax uncertainty can raise discount rates.

Thus, ABRASV’s explicit scenario modeling yields richer sensitivity analysis than IVS.

5. FDI Implications

For international investors:

Transparency Gains

ABRASV promotes:

Clear methodologies for BRL risk treatment
Sector-specific assumptions are openly documented.
Mandatory scenario disclosures

This enhances investor confidence in cross-border comparisons.

WACC and Capital Structuring

Given higher implied risk premiums under ABRASV (from currency and country risk), the Weighted Average Cost of Capital (WACC) is often higher for Brazilian valuations than IVS alone would suggest.

These impacts:

Bid pricing for acquisitions
Yield expectations for strategic investors.
Financing decisions (debt vs equity mix)

Valuation Drivers for FDI

Investors now focus on:

Hedging strategies for BRL exposure
Tax optimization under evolving Brazilian tax law
Commodity price risk mitigation

ABRASV’s structured guidance facilitates more formal integration of these drivers.

6. Practical Takeaways

Adoption	Global Framework	Brazil-Tailored Application
BRL Volatility	Implicitly Permissive	Explicit Methodology
Commodity Sector	Generic DCF Guidance	Sector-Specific Modeling
Tax Assumptions	Market Participant	Scenario-Driven
Country Risk	Permissive	Mandatory Premium Calculation

Conclusion

The Brazilian Valuation Standards (ABRASV 2026) reaffirm Brazil’s commitment to valuation transparency and economic realism. By extending IVS with country-specific constructs — such as BRL volatility frameworks, structured commodity sector guidance, and enhanced tax scenario modeling — ABRASV provides a more nuanced valuation toolkit for agribusiness, mining, and FDI stakeholders.

For global investors and valuation practitioners alike, appreciating the methodological differences between ABRASV and IVS is essential to producing credible valuations — ones that accurately reflect Brazil’s macroeconomic context, regulatory landscape, and investment risk profile.

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