Broad legal: Agreement confirms that companies can transfer State Tax on Goods and Services (ICMS) credits to the destination State
The National Council of Fiscal Policy (Confaz) published a supplementary regulation (technically, an agreement) stating that companies can transfer State Tax on Goods and Services (ICMS) credits to the destination State when goods are moved between places of business of the same owner. This is because the Federal Supreme Court (STF) had already ruled that the transfer of goods from one State to another is not considered an ICMS taxable event if it involves the same National Register of Corporate Taxpayers (CNPJ).
Provisional Presidential Decree (MP) 1,262/24 published: Adoption of Pillar 2 and Additional Social Contribution on Profits (CSLL)
On October 3, 2024, the Federal Government published Provisional Presidential Decree 1,262/24 (MP 1,262), which establishes an additional Social Contribution on Profits (CSLL) equivalent to the so-called Qualified Domestic Minimum Top-up Tax (QDMTT). On the same date, Regulation No. 2,228/2024 (IN 2,228) regulating the subject was published.
Introduction of additional Social Contribution on Net Profit (“CSLL”) rate, in alignment with OECD’s Pillar 2 initiative
On October 3rd, Provisional Measure 1,262 (“MP 1,262”, equivalent to an executive order) was enacted, introducing OECD’s Pillar 2 rules to the Brazilian tax system. Although it still needs to be approved and converted to Law, (if approved) no major changes are expected as it should not deviate from the OOECD’s GloBE rules model.
Changes in offshore taxation and wealth planning
One of the most discussed topics during the 2024 Annual Individual Income Tax Return (DIRPF) filing season was foreign investments—especially the tax rule changes introduced by Law 14,754/2023.
Law changes criteria for adjusting judicial and extrajudicial deposits involving the Federal Government
Among other topics, the recently enacted Law No. 14,973/2024 changed the rules applicable to deposits made in administrative or judicial proceedings involving the Federal Government or any of its agencies. It revoked Law No. 9,703/1998, which until then had provided for judicial and extrajudicial deposits of federal taxes and contributions.
Sales to the Free Trade Zone are exempt from Social Integration Program Contribution (PIS) and Social Security Financing Contribution (COFINS)
In 2020, the STF decided that the percentages of social contributions are unconstitutional. The Federal Tax Authority confirmed, through a response to inquiry, that supplier sales to the Manaus Free Trade Zone (ZFM) have occurred without the levy of Social Integration Program Contribution (PIS) and Social Security Financing Contribution (COFINS).
The Brazilian Federal Court of Appeal for the first circuit (TRF-1) cancels Income Tax (IR) charge that had been stalled at the administrative level
The 8th Panel of the Brazilian Federal Court of Appeal for the 1st circuit (TRF-1) accepted an appeal by Vertical Equipamentos, a Bahia-based company in the cargo transportation and handling sector, and cancelled a tax assessment of BRL 3.7 million related to Corporate Income Tax (IRPJ) and Social Contribution on Profits (CSLL). The reason for the cancellation is uncommon in tax cases: it involved the application of the so-called intercurrent statute of limitation—a legal argument previously thought unlikely to succeed for taxpayers.
Stock options: impacts of the Superior Court of Justice (STJ)’s judgment on the Brazilian market
Judgment of Repetitive Precedent-Setting Issue 1,226 by the Superior Court of Justice (STJ) is approaching. The Precedent-Setting Issue is scheduled for the session of September 11, with Justice Sérgio Kukina as the reporting judge, and originates from the allocation of the appeals REsp 206.964.4/SP and 207.456.4/SP. The issue under judgment, which is at the heart of the controversy, is determining the legal nature of Stock Option Plans—specifically, whether they should be classified as remuneration or as commercial transactions.
