Historical and Legal Context: After the Brazilian Supreme Federal Court (STF) ruled on the so-called “century thesis,” which excluded ICMS (a state-level value-added tax) from the calculation bases of PIS and COFINS (federal social contributions), new debates and disputes between tax authorities and taxpayers continue to arise. This decision allows companies to recover overpaid tax credits.
Following the STF’s general repercussion ruling, many taxpayers began to calculate considerable amounts of PIS/COFINS to be recovered. The main question raised was when these recovered amounts should be subject to taxation under IRPJ (corporate income tax) and CSLL (social contribution on net profit), either upon the final judgment of the judicial process or upon the approval of the offsetting.
The Brazilian Tax Authority (Receita Federal) expressed its stance on the matter through COSIT (Coordination of Tax Law and Legal Advisory) Ruling No. 183/21, in which it established that if the judicial decision did not specify the exact amount to be recovered, taxation would not occur at the time of the final judgment. According to this consultation solution, taxation should only take place during the first offsetting when the company declares the total amount to be recovered to the tax authorities.
However, in light of recent changes made by the Executive Branch, especially through Provisional Measure No. 1,202/2023, the Receita Federal issued a new Consultation Solution (COSIT No. 308/2023) to revise its previous stance and bring significant changes to the taxation rules for recovered credits, especially those arising from judicial proceedings.
The New Taxation of Recovered Credits: According to Consultation Solution 308/2023, the taxation of the recoverable amount should occur at the moment of accounting recognition of the amounts to be refunded, no longer solely during the first offsetting, as was common practice until then.
This means that companies will have to pay taxes on these credits before receiving them definitively. This instituted measure raises legal doubts, especially because the mere accounting recognition of an amount does not imply the occurrence of the tax liability trigger. Moreover, for IRPJ and CSLL to be due, there must be an economic or legal availability of income, which does not occur before the offsetting.
Provisional Measure and Limitation of Offsets: The situation became even more complex due to Provisional Measure 1,202, which limits the offsets of these credits. This limitation contradicts the provisions of the Brazilian National Tax Code (Article 170) as it prevents the enjoyment of a right guaranteed by the Judiciary.
Given these circumstances, it is possible to challenge these new regulations in court, seeking to set aside the provisions contained in COSIT 308/2023 and to ensure that taxation occurs with each offset, rather than in advance, as the Brazilian Tax Authority intends.