The CARF, Administrative Council of Tax Appeals, has just approved 33 new Precedents, Precedents 129 to 161. The Precedents are a confirmation of repeated decisions rendered by the judges, the Councilors, and are an important instrument for standardizing jurisprudence.
The Precedents approved will bind the Councilors, avoiding contradictory positions in the CARF, guiding Taxpayers and Tax Auditors in the rendering of decisions, and are usually used by the PGFN, Attorney General Office of the National Treasury, in the conduction of judicial proceedings, and may even imply the PGFN's waiver to appeal the issues summarized favorably to the Taxpayers.
Among the 33 Precedents, we highlight in this note the Precedents 133, 134, 139, 141 and 146, whose wording is favorable to the Taxpayers:
- Precedent 133: Failure to comply with the summons to provide clarifications does not justify, per se, an increase of the ex-officio fine, when such conduct led to the presumption of omission of revenues or income;
- Precedent 134: The mere existence, in the articles of incorporation, of an activity prohibited to Simples Federal does not result in the exclusion of the taxpayer, being necessary that the inspection proves the effective performance of such activity;
- Precedent 139: Discounts and rebates granted by financial institutions in the renegotiation of credits with their clients constitute deductible operating expenses from the taxable income and the CSLL tax basis, and the provisions of articles 9 to 12 of Law 9430/1996 do not apply to this circumstance
- Precedent 141: The financial investments made by credit cooperatives constitute cooperative acts, which rules out the charge of the IRPJ and CSLL on the respective results; and
- Precedent 146: The active exchange variation arising from investment abroad evaluated under the equity method is not taxable by the IRPJ and CSLL.
We also highlight below some proposed Precedents not approved by the CARF, which knowingly avoid judgments unfavorable to Taxpayers and which, if approved, could imply in unfavorable distortions in the interpretation of the federal tax legislation and harm the analysis of administrative proceedings:
- 18th Proposal: Interest on shareholders' equity calculated on prior years' equity accounts is nondeductible;
- 28th Proposal: The deduction of the amortization of premium for future profitability is conditioned to the proof of its economic basis, which, in accordance with the original wording of § 3 of article 20 of Decree-law no. 1,598, of 1977, occurs upon contemporaneous documentation of the acquisition of the investment, it being inadmissible to demonstrate this through a document prepared after the acquisition;
- 32nd Proposal: The rejection of the expense of amortization of goodwill that was generated internally to the economic group, without any expenditure, should be maintained; and
- 35th Proposal: The rules for receiving Profit and Result Sharing (PLR), dealt with in Law 10101/2000, must be established in an agreement signed prior to the start of the calculation period.
We remain at your disposal for further clarifications.
