This paper evaluates the impact of the decentralization of Rural Territorial Tax (ITR), in municipalities of the Rio Grande do Sul State. ITR contains instruments that act in the extra and fiscal spheres. The literature evaluates its effectiveness as insignificant tough, due to the oversight of the Federal Government. The 100% covenant aims to face this issue, transferring the tax to the interested municipalities that would assume the administration of ITR. This paper analyzes the impact of the agreement over taxation and extra-fiscal aspects, added value, soil usage, agricultural border expansion, and land concentration of the associated municipalities. By using the difference-in-differences method and data from 2002 to 2019, the study found evidence that the associated municipalities experimented with up to 35% ITR collection. Up to 12% of soil usage was raised. Agricultural product participation in the total production is up to 24% higher. Any statistical effects on the concentration of soil or deforestation. The results suggest that the decentralization of ITR is successful in raising the efficiency of ITR fiscal and extra-fiscal taxation. Future research will expand the analysis for other regions or at a national level.