This May 30, the Brazilian Government made use of the compliance with the claims of truckdrivers on strike to change the compensation rules of federal taxes managed by the Federal Revenue Service. On that day Law 13,670/2018 was published, which changes Law 9,430/96, among other.
According to those changes, which took effect on the date of its publication, the Legal Entities subject to tax calculation regime based on taxable profit cannot compensate debits calculated based on monthly estimates.
See below the changes made by the Brazilian Government:
Art. 74. The taxpayer who records credits, including the legal ones ruled as res judicata, related to a levy or contribution managed by the Brazilian Federal Revenue Service, liable to restitution or reimbursement, may use it to offset its own debts related to any tax and contribution managed by that agency.
- 1oThe compensation in the caput will be made upon the delivery, by the taxpayer, of a statement that will contain information regarding the credits used and the related debts to be offset.
- 3oIn addition to the hypotheses provided for in the specific laws on each tax or contribution, the taxpayer cannot compensate upon submission of the declaration referred to in paragraph 1:
IX – the debts related to the monthly collection Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) by estimate calculated pursuant to art. 2 of this Law.
These changes will have great impact on the companies taxed by taxable profit, which used the credits to improve their cash, since those companies are now limited to the compensation of other debts during the year.
We must bring attention the fact that the tax compensations are not forbidden for other types of calculation and/or other debits of the taxpayer.
Finally, we point out that this is not an isolated step of the government to limit the use of credits, rather part of a movement started last year that has sought to make it more difficult to use/offset credits. In the previous year the RFB published the IN 1,765/2017 that limits the use of Negative Balance credits of IRPJ and CSLL only after sending the ECF.
Therefore, we believe that it is vitally important that companies conduct tax studies in order to evaluate the best tax option to mitigate the tax burden (taxable, monthly or quarterly), taking into consideration that – if choosing the quarterly option – IRPJ and CSLL have a definitive collection and occasional credits may be used to offset these taxes; or companies must evaluate the possibility of drawing up suspension or reduction trial balances.
Article developed by:
Marcos Vinicius Freitas Gutierres, Tax Manager of PP&C Auditores Independentes.