Legal Taxpayer MP
President Jair Bolsonaro recently signed Provisional Measure no. 899/2019, nicknamed the Legal Taxpayer MP, whose purpose is to promote the settlement of tax debts owed by millions of taxpayers to the Federal Government. Hard-to-recover debts may have discounts of up to 50% in interest, fines and charges and be paid in up to 84 monthly installments. Individuals, micro and small companies may split debts in up to 100 months and obtain reductions of up to 70%.
Brazilian Federal Revenue Service issues regulations for PIS/COFINS and creates controversy
The Federal Revenue of Brazil (RFB) published Normative Ruling (IN) no. 1,911/2019, which now regulates the ascertainment, collection, inspection, collection and administration of the internal PIS and COFINS and in import. The act now contemplates the possibility of excluding the ICMS from the calculation basis of the PIS/COFINS, as already stated by the STF in a recent decision whose judgment of the Motion for Clarification is expected for December this year. However, the RFB determined that the amount to be excluded from the PIS/COFINS' tax basis is the ICMS amount "to be collected", leading to some controversy among taxpayers as to the interpretation of the rule, whether the RFB would deal with the ICMS effectively collected or with the ICMS stated. In this act, the RFB also revoked both Normative Ruling (IN) 247/2002 and IN 404/2004, which were part of the discussions that formed the basis for the STF judgment. It should be pointed out that IN 404/2004 expressly stated that the ICMS comprised "the cost value of acquisition of goods and services for purposes of PIS/COFINS credits. We may conclude that the discussions on the tax basis and PIS/COFINS credits are far from over.
STJ begins to judge the 30% lock for offsetting tax losses of terminated companies
The STJ started to judge last month the application of the 30% lock for offsetting tax losses of companies that were extinguished, merged, spun-off or merged, whose activities were terminated. The STF ruled that this limit was constitutional this year, but the court has not ruled on specific cases, such as that of terminated companies that intend to fully offset accumulated tax losses in their last period. The reporting justice for the case, Justice Napoleão Nunes Maia Filho, has already voted in favor of the taxpayers, ruling out the 30% cap. The case will continue after a request for examination by Justice Gurgel de Faria.
STJ begins to judge PIS/COFINS credits under the single-phase regime
The STJ initiated the trial as to the taking of PIS/COFINS credits on products subject to the single-phase regime. The taxpayer claims that the Repo Law (Law no. 11,033/2004) authorizes the credit even if the product is subject to a zero tax rate. For the taxpayer, the rationale of the PIS/COFINS crediting would fall, therefore, on the PIS/COFINS costs already contained in the taxation of the previous stage, even if there is no levy of the contributions in the sale. The Reporting Justice of the case, Justice Gurgel de Faria, rejected the taxpayer's claims, affirming that the benefit of the Reporto Law does not revoke the other laws dealing with the non-cumulativeness of PIS/COFINS. Justice Napoleão Nunes Maia Filho asked for examination of the case, after which it will resume its course.
COSIT issues Solution of Consultation on the ascertainment of PIS/COFINS credits on trade inputs
COSIT has recently issued Consultation Solution no. 248/2019, whereby it stated that there are no PIS/COFINS credit-generating inputs in the activity of resale of goods, as the inputs generating non-cumulativeness credits would only exist in the activities of production of goods intended for sale and provision of services to third parties. Thus, the RFB concluded that there is no PIS/COFINS credit taking in the commercial activity of resale of goods. This position is contrary to a recent decision of the STJ, in REsp no. 1.221.170/PR, whereby it was concluded that inputs, for PIS/COFINS credit purposes, are those essential or relevant to the company's activity, and directly related thereto.
CARF dismisses part of the billionaire PIS/COFINS assessment on leasing
The CARF partially cancelled a billionaire PIS/COFINS assessment on leasing transactions carried out in 2012 and 2013 by a financial institution. In the case, the institution considered the depreciation of the leased assets as reducing the revenue and at the end of the contract, the value of the assets was fully deducted, and only the profit of the operation was taxed. The judges upheld the assessment in merit, but ruled out the qualified fine of 150% for not identifying malice or fraud in the transaction, in addition to recognizing the statute of limitations for 2012.
Offsetting of credits of company excluded from Simples Nacional
COSIT has recently issued the Consultation Solution no. 288/2019 understanding that it is possible to offset credits by the company that ascertained and unduly paid taxes in the form of Simples Nacional when notified belatedly of its exclusion from the regime.
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"Legal Taxpayer" Executive Order
President Jair Bolsonaro has recently signed Executive Order n. 899/2019, also known as the "'Contribuinte Legal' Executive Order", aiming to promote settlement between taxpayers and the Federal Government concerning tax debts. Debts from which recovery is unlikely may be susceptible of up to 50% discount on interests, fines and fees, and up to 84-month installments. Individual taxpayers and small businesses may benefit from up to 100-month installments and up to 70% discounts.
Brazilian Revenue Service implements regulation for PIS/COFINS and raises controversy
The Brazilian Revenue Service (RFB) implemented Normative Ruling (NR) n. 1.911/2019, which regulates verification, billing, surveillance, collection, and management of PIS and COFINS, in both internal and imports categories. The ruling encompasses the possibility to exclude ICMS (tax on goods) from PIS/COFINS calculation basis, as ruled by the Brazilian Supreme Court (STF) within a recent trial, pending judgment on a Motion for Reconsideration, which is expected to be decided upon in December this year. Nonetheless, RFB established that the amount to be excluded from PIS/COFINS calculation basis should be the equivalent to ICMS "to be collected", which raises controversy among taxpayers about interpretation of the act, as whether RFB is considering the effectively collected amount of ICMS or the reported tax. Within the ruling, RFB has also revoked NR n. 247/2002 and 404/2004, which regulate the matter in accordance with the Supreme Court's judgment, being crucial to stress that Ruling n. 404/2004 would specifically state that ICMS in encompassed by "the amount of goods and services acquired for PIS/COFINS credit entitlement purposes". The conclusion is that debate over calculation basis and credit entitlement for PIS/COFINS are hardly near to an end.
Brazilian Superior Court of Justice starts deciding on 30% limit for offsetting of fiscal losses by terminated companies
Last month, the Brazilian Superior Court of Justice (STJ) began to decide the 30% restriction for offsetting of fiscal losses by terminated, incorporated, spun-off and merged companies whose activities ended. Brazilian Supreme Court (STF) had already regarded the limit as constitutionally acceptable this year, but there were no rulings on specific matters, such as those of terminated companies, which intend to fully offset their aggregated fiscal losses during their last term. Justice Napoleão Nunes Maia Filho, who is presiding the case, has already voted favorably to taxpayers by avoiding the restriction. After the end of the adjournment requested by Justice Gurgel de Faria, the Court will proceed with the trial.
STJ starts deciding on credit entitlement of PIS/COFINS contributions in a single taxpayer liability system
STJ began to decide on credit entitlement of PIS/COFINS contributions on products subject to the single taxpayer liability system. The taxpayer states that Act no. 11,033/2004 (also known as "Reporto Law") enables credits, even if the product is to be sold at a zero rate. Therefore, the PIS/COFINS crediting system would fall upon the contribution costs already embedded into taxes collected in a previous phase, although those contributions are not billed in sales. Justice Gurgel de Faria, who is presiding the case, rejected the taxpayer's position and stated that the concession does not revoke other acts endorsing PIS/COFINS's noncumulative principle. Justice Napoleão Nunes Maia Filho requested adjournment, after which the trial will resume.
COSIT offers an Answer to Advance Tax Ruling Request on inputs for commerce
The General Coordination for the Federal Revenue Taxation System (COSIT) recently offered an Answer to Advance Tax Ruling Request n. 248/2019, in which they stated that no inputs are able to generate PIS/COFINS credit entitlement concerning goods resales, as those would only exist in fabrication of goods intended for sales and in services for a third party. Therefore, RFB has concluded that there are no PIS/COFINS credit entitlements in goods resales. The interpretation is not in accordance with the Supreme Court's recent ruling on Appeal n. 1.221.170/PR, through which the Court established that supplies for PIS/COFINS credit purposes are those regarded as essential or relevant to a company's scope, and directly linked to it.
CARF partially revokes a billionaire charge regarding social security contributions PIS/COFINS on leasing transactions
The Administrative Tax Appeals Board (CARF) has partially revoked billion-BRL charges concerning PIS/COFINS contributions on leasing transactions made in 2012 and 2013 by a financial institution. In the case, the institution considered depreciation of assets subject to the leasing operation as an income reducing factor, and, at the end of the contract, the amount of the assets was completely deducted, having only profits remained as taxable values. Judging authorities kept charges in their substance, but decided to avoid the 150% fine, since they did not recognize any misconduct or fraud, and acknowledged loss of procedural right concerning the 2012 charges.
Offsetting of credits by companies excluded from the Brazilian Simplified Taxation System
Administrative General Coordination of Taxation (COSIT) has recently offered the Answer to Advance Tax Ruling Request n. 288/2019, in which they state it is possible for a company which wrongfully paid taxes within the Brazilian Simplified Taxation System (Simples Nacional) due to late notification on their exclusion from the system to offset those credits.
