BRASILIA, April 2 (Reuters) - Brazil's Congress struck down on Wednesday a proposal to impose new taxes on the internal soy market after fierce opposition from the country's agricultural sector.
An amendment to apply a tax known as PIS/Cofins on soybean sales to some domestic buyers had been removed from a bill to simplify taxation of Brazilian companies abroad that was passed by the lower chamber late on Tuesday.
The lower house of Congress decided to separately vote on non-related amendments on Wednesday.
Agriculture Minister Neri Geller said President Dilma Rousseff's government did not support additional taxes on the farm sector, which has been a rare bright spot in Brazil's otherwise sluggish economy in recent years.
The soy sector has been exempt from PIS/COFINS since last October and few lawmakers supported the change.
Brazil's vegetable oil association Abiove said the proposal would not have affected exports as some market participants had feared, but would have raised costs for the entire soy production chain and was therefore opposed by its members.
Abiove represents multi-national firms like ADM, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp that both process soy and trade soybeans internationally. Brazil is the world's top exporter of soybeans though it exports comparatively few processed soy derivatives like meal and oil.
Rubens Bueno, a lower chamber deputy from Parana state who sponsored the proposal, said he had meant for the tax to discourage speculation, or buying soybeans, storing them and reselling them when prices rise. (Reporting by Maria Carolina Marcello; Writing by Caroline Stauffer; Editing by Bernard Orr)