Brazil: Brazilian Tax Review – March/April 2018

Superior Court of Justice Establishes Criteria for Approval of PIS/COFINS Credits on Inputs

The Superior Court of Justice has taken up the decision of Special Appeal #1.221.170/PR, which deals with the definition of inputs for the purposes of Social Integration Program Tax (Programa de Integração Social), or PIS, and Social Security Financing Tax (Contribuição para o Financiamento da Seguridade Social), or COFINS, credits.

In the decision, which was submitted to the system for repetitive binding appeals, the court solidified the position that using the credits must observe the criteria of the essentiality or relevance of the expense for the taxpayer's activities.

The Superior Court of Justice also approved the following thesis that summarizes the issue: "The definition of input must be determined in light of the criteria of the essentiality or relevance, taking into account the importance of a given item, good or service for the conduct of the taxpayer's economic activity."

Although the appellate decision has not yet been formalized and will need to be analyzed to determine the real scope of the decision, it is nonetheless true that the Superior Court of Justice's position is favorable to taxpayers and could open a path to recovering amounts overpaid in the past and to reducing PIS/COFINS amounts paid monthly by companies.

PGFN Issues Regulations for Freezing Assets without a Court Order

Attorney General's Office for the National Treasury (Procuradoria-Geral da Fazenda Nacional), or PGFN, Ordinance 33/2018 regulates the procedures for freezing debtors' assets without seeking a court order, under Law 13,606/18. With this ordinance, the treasury can record the debt in real and chattel property registries immediately after it has been listed as a past-due debt, even before a tax execution action has been filed.

The constitutionality of this measure has already been challenged before the Federal Supreme Court, under the argument that the so-called "pre-execution recording" violates the principles of due process, adversary proceedings, a broad defense and separation of powers, among others.

OECD/G20 and the European Commission Publish Reports about the Tax Challenges of the Digital Economy

On March 16, 2018, the OECD published an intermediary report about the tax challenges arising under the digital economy, as a continuation to the studies published in BEPS Action 1.

The report discusses how digitalization affects all the areas of tax systems, to provide new service tools to the tax authorities and to taxpayers and to increase the efficiency of identifying tax evasion and of collecting taxes.

A few days later, on March 21, 2018, the European commission proposed new rules to ensure that digital business activities are taxed fairly and in a way that favors growth in the European Union. The suggested measures include a joint reform of the European rules for the taxation of corporate entities in so-called digital economy activities, such as the creation of a definition of a virtual permanent establishment and rules for the allocation of profit among the member states, as well as a provisional tax on certain revenue from digital activities. These suggestions will be submitted for deliberation.

PGFN Regulates Transfer of Real Property in Payment of Tax Debts

The Attorney General's Office for the National Treasury (Procuradoria-Geral da Fazenda Nacional), or PGFN, has published PGFN Ordinance 32/2018, which states the conditions and requirements for indebted taxpayers to transfer real property as payment. The ordinance covers nontax and tax debts listed as past-due, whether or not subject to a court decision, except those that originated under the "National Simple" system.

Among the provisions that should be noted is the requirement that the taxpayer release a claim to any overpayment if the appraisal price of the real property is greater than the debt to be extinguished, and the requirement that, if there has been a deposit into court, the real property can be used only for the balance not covered by the deposit.

Seeking Greater Exchange of Information, Brazil Approves Protocols in Treaties to Avoid Double Taxation with India, South Korea and South Africa

The presidential decree implementing the protocol that amends the Convention to Avoid Double Taxation between Brazil and India has been published. Additionally, the Brazilian Senate has ratified similar protocols in the conventions with South Korea and South Africa (a presidential decree is still needed to bring these latter two protocols into effect).

In all three cases, the protocols are intended to update and expand the reach of the article concerning the exchange of information among the tax authorities of Brazil and the other countries, allowing the signatories greater access to information that is material to collecting taxes in their countries.

Brazil Expands its Social Security Agreement Network

Brazil has signed a social security agreement with Israel, which still needs to be ratified by the Brazilian Senate and implemented through a presidential decree before it becomes effective. Additionally, the Brazilian Senate has ratified a Social Security Agreement between Brazil and Luxembourg, which is still awaiting a presidential decree.

These agreements give each country's workers who are resident in the territory of the other country the opportunity to take advantage of the contribution periods in the two countries to obtain the social security benefit.

Brazil Potentially Joining the OECD Entails an Important Work Program to Study Local Transfer Pricing Rules

The OECD and the Brazilian government have launched the project "Transfer Pricing in Brazil," with the following objectives over the course of three phases: (i) to analyze the legal and administrative framework in effect in Brazil; (ii) to evaluate its strengths and weaknesses; and (iii) to explore options for closer alignment between Brazil and OECD member countries.

This work program was created in the context of Brazil potentially joining the OECD. Since there are important differences between the transfer pricing rules used in Brazil and OECD guidelines, the OECD has chosen to create this program to better understand the differences and avoid double taxation and practices that hide profit.

CARF Decides that Revenue from Travel Agencies Is Restricted to Commissions

The Administrative Tax Appeals Board (Conselho Administrativo de Recursos Fiscais), or CARF, has taken up an appeal filed by a travel agency in which the composition of the company's revenue is at issue.

The taxpayer was issued an infraction notice by Brazilian Federal Revenue for not having included all of the amounts received by the agency in the sale of tourist packages, which include the amounts passed on to hotels, airlines, tourism operators, etc., in its taxable operating revenue. In its challenge, the taxpayer argued that those amounts were not its own revenue but that of third parties, with its own operating result consisting exclusively of the commissions received for this intermediation service.

On the merits of the case, the CARF board granted the taxpayer's appeal, recognizing that, in fact, the travel agency should recognize revenue only in relation to the commissions on the sales. Brazilian Federal Revenue's position on this matter was therefore rejected.

Voluntary Admission Does Not Apply to Special Customs Methods

The Superior Chamber of the Administrative Tax Appeals Board (Conselho Administrativo de Recursos Fiscais), or CARF, has analyzed a case in which the taxpayer was issued an infraction notice with a fine for failing to comply with the deadline for exporting a good under a temporary admission customs method. In the appeal, the taxpayer claimed that the penalty should be lifted because it made a voluntary admission of its failure.

However, the CARF maintained the infraction notice on the argument that the institute of voluntary admission eliminates requirements related only to the principal obligation and does not impede the application of customs fines.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions