Brazil: Brazilian Tax Review – May/June 2016


The Higher Chamber of the Administrative Tax Appeals Council ("CSRF") has recently ruled that the amortization of the goodwill derived from the acquisition of investments is a deductible expense from the Social Contribution on Net Profit ("CSLL"). The court held that taxpayers can deduct the amortization of goodwill from the CSLL tax regardless of whether there is a merger.

Under the decision, the legal rule that this expense is non-deductible from corporate income tax is not applicable to the CSLL tax calculation basis. According to the court, the calculation bases of these two taxes are not identical, which means that the corporate income tax rules do not automatically apply to the CSLL tax. Thus, since there is no specific legal ground for treating the amortization of goodwill as non-deductible for the purposes of the CSLL tax, taxpayers are allowed to deduct it.


Brazilian IRS Normative Ruling IRS 1,634/2016, published on May 9, 2016, introduces new requirements for registration in the Taxpayer Registry of Legal Entities (or "CNPJ," which is the Brazilian corporate taxpayer ID number). These include the need to identify the whole chain of equity interest, from shareholders to the final beneficiaries, especially in case of foreign entities.

The Brazilian IRS has given a deadline for taxpayers who already have a CNPJ number to voluntarily bring their operations in Brazil into compliance. The final beneficiary identification procedure will be effective from January 1, 2017. Legal entities that already have a CNPJ number on December 31, 2016, must identify the final beneficiary at the time of a registration change, with a deadline of December 31, 2018. Legal entities that apply for a CNPJ number from January 1, 2017, onwards will be required to report the final beneficiary within 90 (ninety) days after obtaining their CNPJ number.

Failure to provide the information related to final beneficiaries by the deadline, or failure to submit the documents proving the connection with the foreign entity, will cause the suspension of the foreign entity's CNPJ number. This will prevent banking transactions, including using checking accounts, making financial investments and obtaining loans. The suspension of the foreign partner's CNPJ will also prevent bringing the Brazilian entity's CNPJ number into compliance.


In May 2016, the Brazilian IRS issued Normative Instruction 1,644 in order to extend the deadline of two federal tax benefits in Brazil: REPORTO and RETID.

REPORTO is a special federal tax system created to foster the modernization and enlargement of port facilities by granting the suspension of federal taxes due on the customs clearance and domestic acquisition of certain goods to be used in operating such facilities. The previous deadline for this benefit was December 31, 2015, but Normative Instruction 1,644 extended it to December 31, 2020.

Similarly, the Special Tax Method for the Defense Industry (RETID), which grants the suspension of federal taxes due on the customs clearance and domestic acquisition of defense goods, was extended from March 22, 2017, to March 22, 2032.


As we reported in Brazilian Tax Review 04/2015, in a decision under the repetitive appeals system, the Superior Court of Justice held that sales of imported goods are subject to the Excise Tax (IPI), even in cases in which the imported goods were not subject to any manufacturing process. This decision is binding on lower courts in cases regarding the same issue.

However, the Supreme Court granted a preliminary injunction to a taxpayer in June 2016 in a case challenging the constitutionality of this taxation. The preliminary injunction authorizes the non-collection of IPI on the resale of imported goods until the court enters its final judgment.

We emphasize that the preliminary injunction is applicable only to the taxpayer involved in the case; it does not apply to other taxpayers and the court's final ruling could require payment of the tax.


The Brazilian IRS issued Normative Instruction 1,639 on May 10, 2016, in order to regulate the use of ATA Carnet for the temporary admission of goods into Brazil. This new system represents a considerable simplification of customs formalities for this system.

The ATA system allows the free movement of goods across frontiers and their temporary admission into a customs territory with relief from duties and taxes, by covering the transaction with a single document known as the ATA carnet, which is secured by an international guarantee system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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