In this Tax Law newsletter, you will find:

Liberal Party files Direct Action against Provisinal Measure of tax incetives

Liberal Party (PL) has filed a Direct Action of Unconstitutionality (ADI), against the Provisional Measure (MP) 1185/23. The measure has already been approved by the Federal Senate and is currently awaiting presidential sanction but is already scheduled to come into effect in January 2024.

This MP proposes the taxation of tax incentives by the Corporate Income Taxes (IRPJ and CSLL) and the Social Contribution on Revenue (PIS and COFINS), establishing as a counterpart a tax credit in cases of subsidies for investment.

In other words, MP 1185 intends to change sections of Complementary Law 160, which equates subsidies for operating costs to subsidies for investment and also eliminates the possibility for the constitution of profit reserves as a mechanism for the non-taxation by income taxes.

In the ADI 7551, PL argues that the MP violates the federal pact, as it allows the Federal Government to tax benefits granted by the states and would be reducing the fiscal incentives offered by the states.

The ADI has not yet been included on trial schedule.

Early execution of guarantee is prohibited and federal penalities are limited  

The National Congress has overruled 5 of the 14 presidential vetoes on the CARF Bill (Bill 2384/2023), recently passed into the Law 14.689/2023.

Among the changes, is the provision to prohibit the early execution of bank letters or insurance guarantees presented in tax foreclosure. Such guarantees could only be executed after the final decision of the case.

This provision brings more security to taxpayers that discuss tax charges, since it is common that the Treasury Attorneys try to execute them, bringing unjustifiable burden to taxpayers.

With respect to penalties, the Congress also sustained the provision that limits the federal tax penalties to 100% of the tax debt, determining that the National Treasury cancels the amounts above such limit.

STJ removes restrictions on the deduction of PAT

Superior Court of Justice (STJ) rendered a decision and recognized that the Article 186 of Decree No. 10,854/2021 has incurred illegality by restricting the deduction of the Workers’ Food Program (PAT) to amounts paid to workers earning up to five minimum wages, with the deduction limited to the maximum of one minimum wage.

According to the decision these restrictions are not in the law that created PAT and should not be established by a regulatory decree.

Although it was not a judgment under the general repercussion procedure, meaning it is not mandatory for other courts in the country to apply the decision, it was an important decision.

This newsletter was written by Henrique Lopes, Felipe Omori and André Koscak.

For additional information, contact our Tax team:
Henrique Lopes
Victor Polizelli
Álvaro Lucasechi 
José Flávio Pacheco
Juliana Nunes
Luís Flávio Neto
Felipe Omori

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