The Plenary Session of the Administrative Council of Tax Appeals met on Monday, September 3, to review 32 proposals for new precedents and to update and cancel certain precedents in force.

As a result of the session, 21 new precedents were approved – CARF Precedents No. 108 to 128 –, which will go into effect as of their publication in the Official Federal Gazette. The agency's expectation is that the publications will take place by September 10, such that they will already be in force for the session scheduled for September 11 to 13.

Among the main topics approved, we highlight the following new CARF Precedents: 

  • No. 108 – Application of interest over fines;
  • No. 115 – Legality of the calculation of transfer price PRL 60 according to Normative Instruction No. 243/02;
  • No. 116 - The peremption period for the creation of a tax credit for amortized premium is counted as of the period of its repercussion in the calculation of the tax;
  • No. 124 - The production and exportation of non-taxable products do not generate a presumed IPI credit, and;
  • No. 127 - The impact of CIDE on technical service contracts provided by a foreign person does not require the transfer of technology. 

Some relevant proposals did not obtain a quorum for approval, among them: (i) the non-deductability of premium expenses generated internally for the economic group, (ii) the possibility of simultaneous application of an isolated fine and a sua sponte fine based on Presidential Decree No. 351/2007, and (iii) the auditor of the Brazilian Federal Revenue Service has authority to supervise PPBs, and its conclusions are not binding on the ZFM’s oversight activity.

Below is a table of the main proposals and their results:

Proposals Amendments Result
Plenary Session of CSRF - September 3, 2018

1st Cancellation: cancel Precedent No. 14:

“A simple finding of omission of revenue or income, by itself, does not authorize application of a sua sponte fine, as it is necessary to prove evident fraudulent intent on the part of the taxable person."

 

NOT APPROVED

 

 

1st Proposal of new Precedent: application of interest over fine “Interest on arrears, calculated at
the reference rate of the Special Settlement and Custody System - SELIC, over the amount corresponding to the sua sponte fine"
APPROVED - CARF PRECEDENT No. 108
2nd Proposal: irregularities at the MPF does not give rise to nullity of assessment "Irregularity in the issuance, amendment, or extension of the Writ of Tax Mandamus does not entail nullity of the assessment" NOT APPROVED

4th Proposal: Adjudicatory body does not rule on the listing of assets

Proposal: irregularities at the MPF do not entail nullity of assessment

"The administrative court is not competent to rule on disputes concerning the listing of assets"

 

APPROVED - CARF PRECEDENT No. 109
5th Proposal: assessments due to breach of an ancillary obligation is subject to peremption under article 173, I, except for customs "Except for the events of infraction against customs control, assessments due to breach of an ancillary obligation is subject to peremption under
article 173, item I, of the National
Tax Code - CTN"
NOT APPROVED
1st CSRF

5th Revision: exclusion of leading cases No. 101-95.503, 108-09.808, and 198- 00.080 and alteration of the statement of the abstract of Precedent No. 37. Original text:

"For the purposes of granting a Request for Tax Incentive Order Review (PERC), the requirement to prove good tax standing must be linked to the period to which the Income Statement refers for the Legal Entity that chose the incentive, and proof of discharge is admitted at any time in the administrative proceedings, pursuant to the terms of Decree No. 70.235/72."

New wording:

"For the purposes of granting a Request for Tax Incentive Order Review (PERC), the requirement to prove good tax standing must be linked to the debts existing until the date of submission of the Income Statement of the Legal Entity that chose the incentive, and proof of good standing is admitted at any time in the administrative proceedings, regardless of the time in which good standing was obtained,
even via submission of a certificate
of good standing subsequent to the
date of the choice.”

REVISION APPROVED
10th Proposal: IRRF for unidentified
or unproven beneficiary is subject
to the peremption period set forth in article 173, I
"Withholding Income Tax on payment to an unidentified beneficiary, or without proof of the transaction or cause, is subject to the peremption period established in article 173, I, of the National Tax Code - CTN” APPROVED - CARF PRECEDENT No. 114
11th Proposal: taxes with enforceability suspended by judicial decision are not deductible from the tax base of the IRPJ and CSLL "Taxes with enforceability suspended by virtue of a judicial decision are not deductible in determining the tax base of the IRPJ and CSLL." NOT APPROVED
12th Proposal: Interest on taxes with enforceability suspended by judicial decision are not deductible from the tax base of the IRPJ and CSLL “Interest on arrears applicable over taxes with enforceability suspended by virtue of a judicial decision are not deductible in determining the tax base of the IRPJ and CSLL." NOT APPROVED
13th Proposal: legality of the calculation
of PRL 60 per Normative Instruction
No. 243/02
"The systematic framework for calculating the "Sixty Percent Resale Price minus Profit with Sixty Percent Profit margin Method (PRL 60)” provided for in SRF Normative Instruction No. 243, of 2002, does not violate the provisions of article 18, item II, of Law No. 9,430, of 1996, as amended by Law No. 9,959 of 2000." APPROVED - CARF PRECEDENT No. 115
14th Proposal: possibility of simultaneous application of an isolated fine and sua sponte fine based on Presidential Decree No. 351/2007 "Since the entry into force of Presidential Decree No. 351, of 2007, converted into Law No. 11,488, of 2007, the isolated fine for failure to collect estimates may be demanded simultaneously with the fine for non-payment of IRPJ and CSLL calculated in the annual adjustment." NOT APPROVED
15th Proposal: The peremption period for the constitution of premium credit is counted from the period of its repercussion in the calculation of the tax "For the purpose of counting the peremption period for the constitution of a tax credit relative to the amortization of premium in the form of articles 7 and 8 of Law No. 9,532, of 1997, it is necessary to take into account the period of its repercussion in the calculation of the tax to be collected." APPROVED - CARF PRECEDENT No. 116
16th Proposal: non-deductibility of internal premium "The amortization of premium generated internally for the economic group, without any expense, is not deductible in the calculation of real profit."

NOT APPROVED

 

19th Proposal: there is a capital gain in merger transactions, it being the positive difference between the stake held in the acquiring company and the value of the merged shares "In merger transactions via acquisition of shares, the positive difference between the value of the equity interest that comes to be held by the acquiring company and the value of the merged shares, registered prior to the transaction, constitute a taxable gain for the legal entity domiciled in Brazil holding the merged shares" NOT APPROVED
20th Proposal: IRRF applicable over payment to unidentified beneficiary, or without proof of the transaction, may be required together with IR over the profit unduly reduced by the payment "Withholding Income Tax over payments to unidentified beneficiaries, or without proof of the transaction or cause, may be demanded concurrently with income tax over the profit unduly reduced by such payments." NOT APPROVED
20th Proposal: IRRF applicable over payment to unidentified beneficiary, or without proof of the transaction, may be required together with IR over the profit unduly reduced by the payment "Withholding Income Tax over payments to unidentified beneficiaries, or without proof of the transaction or cause, may be demanded concurrently with income tax over the profit unduly reduced by such payments." NOT APPROVED
2nd CSRF 
21st Proposal: calculation of benign retroactivity of fines "In the case of fines for breach of a principal obligation and breach of an ancillary obligation due to the lack of a declaration in GFIP, associated and required in sua sponte assessments relating to triggering events that occurred prior to the enactment of Presidential Decree No. 449, of 2008, converted into Law No. 11,941, of 2009, benign retroactivity should be assessed by comparing the sum of the penalties for the breach with the principal and ancillary obligations, applicable at the time of the triggering events, with a fine of 75%, as set forth in article 44 of Law No. 9,430, of 1996. APPROVED - CARF PRECEDENT No. 119
26th Proposal: IRRF with respect to income subject to the annual adjustment constitutes advance payment for the purposes of application of article 150, paragraph 4. "Withholding income tax subject to annual adjustment constitutes payment sufficient to call for the application of the peremption rule provided for in article 150, paragraph 4, of the National Tax Code." APPROVED - CARF PRECEDENT No. 123
3rd CSRF 
27th Proposal: the production and exportation of non-taxable products do not generate presumed IPI credit "The production and exportation of products classified in the IPI Application Table (TIPI) as "non-taxed” do not generate the right to the presumed IPI credit referred to in article 1 of Law No. 9,363, of 1996." APPROVED - CARF PRECEDENT No. 124
28th Proposal: no monetary correction or interest applies over the reimbursement of PIS/COFINS "In the reimbursement of COFINS and non-cumulative PIS Contribution no monetary correction or interest applies, pursuant to articles 13 and 15, VI, of Law No. 10,833, of 2003." APPROVED - CARF PRECEDENT No. 125
29th Proposal: the auditor of the RFB is competent to supervise PPBs, and its conclusions are not binding on the conclusions of the assessment of the ZFM "The Auditing Agent of the Federal Revenue Service of Brazil is competent to supervise compliance with the Basic Production Process, and is not bound to the conclusions of the Superintendence of the Manaus Free Trade Zone." NOT APPROVED
30th Proposal: a voluntary disclosure does not affect the penalties for non-compliance with the instrumental duties of providing information to the customs administration, but after article 102 of Decree-Law No. 37/66 “A voluntary disclosure does not affect the penalties applied for non-compliance with the instrumental duties resulting from failure to comply with the deadlines set by the Federal Revenue Service of Brazil to provide information to the customs administration, even after the advent of the new wording of article 102 of Decree-Law No. 37, of 1966, given by article 40 of Law No. 12,350, of 2010." APPROVED - CARF PRECEDENT No. 126
31st Proposal: the impact of CIDE on technical service contracts provided by a foreign person does not require the transfer of technology. "The application of the Contribution for Intervention in the Economic Domain (CIDE) in the contracting of technical services provided by persons resident or domiciled abroad dispenses with the occurrence of transfer of technology."

APPROVED - CARF PRECEDENT No. 127

 

32nd Proposal: for the purposes of calculation of the presumed IPI credit, revenues from non-industrialized products make up both export revenue and gross operating revenue. "In calculating the presumed IPI credit dealt with in Law No. 9,363, of 1996, and Ministerial Order No. 38, of 1997, export revenue by the taxpayer from non-industrialized products are included in the composition of both Export Revenue - RE, and Gross Operating Revenue - ROB, therein being reflected on both sides of the export coefficient: numerator and denominator." APPROVED - CARF PRECEDENT No. 128