Provisional Measure No. 1,303/2025, published on June 11, introduces significant changes to the Brazilian tax system. While it includes positive developments—such as the expansion of loss offsetting in financial investments and a more streamlined approach to hedge transactions—its most immediate and revenue-generating impact arises from the new restrictions on tax offsets, which the government has identified as the primary source of increased revenue for 2025.
Tax Offsets: Fiscal Reinforcement and Constitutional Concerns
The Provisional Measure substantially modifies the legal regime applicable to tax offsets, particularly regarding PIS and COFINS contributions. Article 64 provides that certain tax offsets will be deemed “undeclared” if:
- They are based on overpayments or undue payments lacking a valid DARF (Brazilian Tax Payment Form);
- They involve PIS/COFINS credits unrelated to the taxpayer’s economic activity.
Key Considerations:
- Once deemed “undeclared,” the offset is automatically rejected and cannot be challenged before the Administrative Tax Appeals Council (CARF), restricting taxpayer recourse to the Brazilian Federal Revenue (RFB) and, subsequently, the Judiciary.
- This grants the tax authority broad discretion to assess whether a credit is pertinent, raising legal uncertainty—especially in cases requiring interpretation of what constitutes a “related economic activity.”
Presumed Credits:According to the RFB, the restriction targets presumed credits, not ordinary credits (e.g., credits on inputs). Nevertheless, there is a real risk of interpretative overreach, particularly in industries with disputed definitions of what qualifies as an input (e.g., agribusiness, food manufacturing).
Loss Offsetting in Financial Investments: A Measured Advance
The MP also updates the treatment of losses incurred in financial investments. Previously, offsets were restricted to assets of the same nature (e.g., stocks with stocks, funds with funds). The new rule allows offsetting across different types of financial assets, increasing flexibility in tax planning.
Notable Improvements:
- Aligns with the principle of contributive capacity, as tax liability arises only after economic recovery.
- Enables, for instance, the offsetting of losses on derivatives with gains from fixed-income or multimarket funds.
Time Limitation:
- Losses may be carried forward and offset only within a five-year period, which may conflict with constitutional principles of non-confiscation and reasonableness, as it undermines the full recovery of capital prior to taxation.
Taxation of Supply Chain Financing (Risco Sacado): Reduced IOF Rates, Potential Litigation
The Provisional Measure, alongside Decree No. 12,499/2025, revises the tax treatment of risco sacado operations—commonly used to advance receivables.
What is Supply Chain Financing (Risco Sacado)?
This structure involves a company advancing accounts receivable through a financial institution, which assumes the counterparty credit risk (e.g., from installment sales).
Tax Amendment:
- Elimination of the fixed IOF rate;
- Imposition solely of a daily IOF rate of 0.0082%, potentially reducing the overall tax burden by up to 80% on these operations.
Hedge Transactions: New Simplified Framework Favorable to Taxpayers
A notable improvement is the simplification of hedge transaction taxation, governed by Article 48 of the MP.
Key Changes:
- Net results from hedge operations may now be deducted from the IRPJ and CSLL tax bases, provided that:
- Transactions are conducted at market prices; and
- Documentation is retained, though no longer subject to tests of “necessity” or “appropriateness” for deductibility.
Practical Impact:
- Reduces litigation before CARF concerning whether the hedge was “genuine” or speculative.
- Benefits sectors such as agribusiness, exporters, and large borrowers that routinely use derivatives for currency and interest rate risk protection.
Conclusion: Fiscal Reinforcement Brings Heightened Risk and Opportunity
Provisional Measure No. 1,303/2025 introduces a package of rules with subst.antial fiscal impact, particularly by tightening the rules for tax offsets. While it offers advances—such as the simplification of hedge rules and expanded flexibility in offsetting financial losses—it also centralizes power within the Federal Revenue Service to unilaterally invalidate credits and offsets, raising constitutional red flags and likely spurring extensive litigation.
Recommended Actions for Companies and Investors:
- Review tax credit assessment and usage strategies;
- Evaluate exposure to tax assessments and potential enrollment in tax debt registries;
- Leverage opportunities such as simplified hedge treatment and broader loss offsets through strategic planning.