Angelo Francisco Barrionuevo Ambrizzi
Lawyer at Marcos Martins Advogados
The Federal Revenue Office has ruled that tax will be levied on gains obtained from discounts on fines and interest on tax debts due to Incentive Installment Payments.
If your company has paid its tax debts in installments, please read this notice carefully.
The Federal Tax Authorities have concluded that Corporate Income Tax, Social Contribution on Net Profit, PIS and COFINS are levied on discounts granted for fines and interest on tax debts included in the Tax Regularization Program, according to Consultation Solution No. 65 – General Coordination of Taxation (Cosit).
This understanding is nothing new, since the Federal Revenue Office had already stated that tax debt discounts should be taxed. The uniqueness lies in the fact that the Consultation Solution determined that this guidance also applies to PERT.
The legal basis is that the reduction in fines and interest generates a gain for companies by reducing tax liabilities and the counterpart of this reduced balance should be an income account.
As this is revenue, the Federal Tax Authorities believe that the reductions should be taxed by PIS and COFINS, provided that the company is taxed under the non-cumulative regime
In addition to PIS and COFINS taxation, the Federal Revenue Service’s guidance is that if the company considered the fine and interest on the tax credit as an expense for the purposes of calculating the IRPJ, and subsequently benefited from the discounts, it should reverse this position and offer the legal benefit to taxation.
The understanding materialized in Consultation Solution No. 65 – Cosit is totally questionable since the benefits granted by the installment payment law do not make up the concept of billing, but rather a mere reduction in tax liability due to a legal benefit, which is not a case of tax incidence.
Both the administrative and judicial spheres have spoken out on this issue. There are decisions in favor of the taxpayer that IRPJ, CSLL, PIS and COFINS are not levied when there is a legal reduction in fines and interest when adhering to incentive installments.
Marcos Martins Advogados has made its tax team available to answer questions and provide guidance to taxpayers who have joined the Tax Regularization Program – PERT.
