Candido Martins Advogados

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What to expect from the Brazilian IRS in 2021?

21.01.2021

2020 ended without the long-awaited tax reform. And, it seems, we still have a long way to go until a consensus is reached on legislative changes by simplifying the Brazilian tax system.

Although we continue to monitor and participate in the debates of the National Congress on the tax reform, its important to focus our surveillance and attention on the activities of the Federal IRS in the context of its tax assessments and publications of normative acts, such as consultation solutions and normative instructions.

If the IRS repeats its behavior of recent years in 2021, the prognosis is not good.

In retrospect, the Tax Authorities have published normative acts with interpretations often contrary to the understanding of the Judiciary and, in some cases, the Congress.

Who remembers Cosit Consultation Solution No. 13/2018, in which the IRS understood that the ICMS to be refunded to taxpayers based on the thesis of the exclusion of ICMS from the PIS and COFINS calculation basis, would be the amount of the monthly tax to be collected, and not the one actually contained in the invoice – without the Supreme Federal Court (STF) expressly expressing its opinion on the subject? The effect of this decision is to significantly reduce the amount that would be refunded to taxpayers.

Another interpretation that caused confusion was conveyed by the recent Consultation Solution No. 145/2020, in which the IRS established that investment subsidies, in order to stop being computed in the determination of real profit and in the CSLL calculation base, should have been granted “as a stimulus to the implantation or expansion of economic business” – being that the legislation does not impose such requirement. On the contrary, Congress put an end to this issue by simplifying the discussion on the tax advantage of these subsidies by approving Complementary Law No. 160/2017.

If such attitudes are to be seen in 2021, the Tax Authorities will continue to contribute to the legal uncertainty of our tax system and, consequently, to the increase in the so-called “Brazil cost”.

Without leaving aside the pressure for the urgent necessary tax reform, it is up to society, more than ever, to remain vigilant and attentive to question and combat these conducts. Otherwise, even a comprehensive reform, on its own, would not serve to alleviate the taxpayers’ uncertainties and bring more investments to the country.

By Júlia Malafaia Vituli Silva, associate of Candido Martins Advogados
[email protected]

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