Angelo Francisco Barrionuevo Ambrizzi
Lawyer at Marcos Martins Advogados
This week, the Brazilian Federal Revenue Service published COSIT Normative Opinion No. 5/2018, which defines the concept of inputs for the purposes of taking PIS/COFINS credits.
The extensive normative opinion provides several practical examples on the subject in light of what the First Section of the STJ decided in the judgment of Special Appeal 1.221.170/PR, submitted to the system of repetitive appeals.
This is because, in April 2018, the STJ defined that the legal concept of inputs for PIS/COFINS purposes must be assessed in the light of the criteria of essentiality or relevance, considering the indispensability or importance of a given good or service for the taxpayer’s economic activity.
In this context, the Normative Opinion was issued with the aim of clearing up doubts about the interpretation of the Superior Court of Justice ruling.
According to the Federal Revenue Service, the essentiality criterion is present in relation to the item on which the product or service intrinsically and fundamentally depends, constituting a structural and inseparable element of the production process or the execution of the service, or when its lack deprives them of quality, quantity and/or sufficiency.
The criterion of relevance, in turn, is materialized in the item whose purpose, although not indispensable to the product or service, is part of the production process, either due to the singularities of each production chain or by legal imposition.
The rule issued by the Revenue Department is mandatory for tax agents and serves as a guideline for taxpayers to measure the risks of taking certain credits.
It is clear, however, that the Normative Opinion tends to restrict the right to credit in certain cases, since the concepts of essentiality and relevance have a good deal of subjectivity, and it is up to the taxpayer to assess the risks of taking credit and submit to administrative and/or judicial discussions.
In this context, Marcos Martins Advogados puts its Tax Law team at the disposal of any interested parties to clarify doubts regarding the interpretation of the Federal Revenue Service contained in the aforementioned normative opinion, in order to support decision-making regarding crediting.
