In the case of cigarettes having as destination the domestic market, the tax must be paid by the industrial establishment. Whereas in the case of the cigarettes coming from abroad, the tax will be paid by the importer.
In the event differentiated prices are adopted for the same brand, the highest retail price will be considered as taxable basis. For such purpose, the Brazilian Revenue Service will announce the name of the cigarette commercial brands and the respective retail prices in the domestic market.
The Decree contemplates the possibility of two systems to pay the Tax on Manufactured Products (Imposto sobre Produtos Industrializados – IPI):
• The general system does not depend on the formalization of the taxpayer´s option. Under this system, the tax is calculated by applying a 300% rate over the amount that results from the application of the proportion of 15% over the cigarette retail price.
• The special system requires that the taxpayer opts for its application before the Brazilian Revenue Service, for all its establishments, by the last day of December of each calendar year, and the system will be valid as of the first business day of the month subsequent to the option. Especially for 2011, the option may be made by November 30.
The special system contemplates the adoption of two installments to calculate the IPI to be collected. Under this system, a previously set rate is applied, according to the table below and to the calculation period, over the amount that results from the application of the proportion of 15% on the cigarette retail price. The specific rate, also set in the table below, must be added to such amount obtained:
Validity Rates Ad Valorem Specific Pack Box Dec. 01/2011 to Dec. 31/2012 40.0% R$ 0,90 R$ 1,20 Jan. 01/2013 to Dec. 31/2013 47.0% R$ 1,05 R$ 1,25 Jan. 01/2014 to Dec. 31/2014 54.0% R$ 1,20 R$ 1,30 As of Jan. 01/2015 60.0% R$ 1,30 R$ 1,30
Decree nº 7.555/11 further established the cigarette retail minimum selling price, according to the table below. It should be emphasized that, according to such rule, cigarettes sold in violation of the prices set out below will be subject to the seizure penalty, after which the legal entity will be prohibited from selling cigarettes.
Validity Value per Twenty Units Dec. 01/2011 to Dec. 31/2012 R$ 3,00
(Decree nº 7.555, Aug. 19.2011 / DOU-I, Aug. 22.2011)
LEGISLATION Ruling Instruction of the Brazilian Revenue Service nº 1.187/11 governs tax incentives to technological research activities and technological innovation development
Law nº 11.196, of November 21, 2005, provides for various tax incentives to the activities mentioned above. However, in spite of Decree nº 5.798, of June 7, 2006, issued with the objective of regulating the benefits granted by such Law, a few issues were still pending regulation and caused difficulties to the taxpayers.
One of the relevant issues pending of regulation was the need and the manner to allot costs and expenses of the research projects. In this context, Brazilian Revenue Service (Receita Federal do Brasil - RFB) Ruling Instruction nº 1.187/11 provides that, in order to use the tax benefits provided in Law nº 11.196/05, the legal entity must accomplish an analytical control of the costs and expenses of each Project benefiting from the incentive.
According to the Ruling Instruction, the legal entity must adopt uniform and consistent criteria along time, recording the expenses in details and individually in connection with the hours incurred, work developed, and costs of each researcher and technical support employee involved in the projects benefiting from the incentive.
(Ruling Instruction 1187, Aug. 29.2011 / DOU-I, Aug. 30.2011)
LEGISLATION Payment in installments of debts regarding the social contributions established by Complementary Law nº 110/01
On August 10 of this year Administrative Ruling nº 568/11 of the Attorney General Office of the National Treasury was published providing for the payment in installments of debts in connection with the social contributions established by Complementary Law nº 110/01, pursuant to Law nº 11.941/09, already listed for collection by the Federation, irrespective of being object of a lawsuit.
The payment in installments as provided in the Administrative Ruling has as its object the social contributions established by Complementary Law nº 110/2001, due by November 30, 2008 and already listed for collection by the Federation by July 30, 2010, owed by debtors who have chosen this type of payment of the taxes according to the system contemplated in item III, § 1, art. 1, and item II, §2, art. 4, of PGFN/RFB Joint Administrative Ruling nº 6/09.
The regulation for the payment is destined to the debtors who chose to pay the totality of their debts in installments, and the respective list will be announced on the websites posted by Caixa Econômica Federal (CEF) and the PGFN.
The granting and management of the term payment referred to in the Administrative Ruling have been assigned to CEF, which will publish the rules and procedures to make the ruling effective (Circular nº 557 of CEF, of September 13, 2011), will prepare, make available and sign the Term of Debt Acknowledgment and Payment Commitment of the Social Contributions (TCDCP-CS) set out by CL nº 110/2001 - TCDCP-CS, and it will also appreciate any requests for inclusion, exclusion or rectification, waiver and termination.
In this context, CEF will call the debtor individually with the objective of entering into an agreement for the payment in installments that will be formalized with the execution of the TCDCP-CS between the debtor and CEF, which will set out the consolidated amount of the debts, the amount of installments and the reductions applied according to the debt type.
Finally, the ruling act stipulates that the payment of the social contributions determined by CL nº 110/01 will only be deemed deferred on the date the debtor signs the TCDCP-CS and pays the first installment, due on the date of the execution of the Term.
The ruling assigned to CEF was issued by means of CEF Circular nº 557/11 that established the Employer´s Guideline Manual.
Jan. 01/2013 to Dec. 31/2013 R$ 3,50 Jan. 01/2014 to Dec. 31/2014 R$ 4,00 As of Jan. 01/2015 R$ 4,50
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(PGFN Administrative Ruling nº 568, Aug. 09.2011 / DOU-I, Aug. 10.2011; CEF Circular nº 557, Sep. 13.2011 / DOU-I, Sep. 15.2011 )
BRAZILIAN REVENUE SERVICE Deductibility of the depreciation of assets consequent of the changes introduced by the international accounting rules (International Financial Reporting Standards- IFRS)
By means of Ruling Opinion nº 1/11 the Brazilian Revenue Service clarified that the differences to calculate the depreciation of fixed assets consequent of § 3, article 183, of Law nº 6.404/76, with the amendments brought by laws nº 11.638/07 and 11.941/09, will have no effects for the purposes of calculating the real profit and the basis for calculation of the Social Contribution on the Net Profit (Contribuição Social sobre o Lucro Líquido – CSLL) of the legal entity subject to the Tax Transition System.
The Ruling Opinion aims at clarifying doubts concerning the deductibility of the depreciation of assets consequent of the changes introduced by the international accounting rules (IRFS), through laws nº 11.638/07 and 11.941/09, during the Tax Transition System, optional for the years 2008 and 2009, but mandatory as of 2010.
On one hand, § 3, article 183, of Law nº 6.404/76 established a new depreciation system based on the “estimated economic useful life”, so that the company must evaluate the time during which the asset will produce economic benefits to the company, as well as assign a residual value to the asset (consequently, the value that may be depreciated corresponds to the difference between the acquisition value of the asset and its residual value).
On the other hand, the Tax Transition System maintains the application of the accounting methods and criteria effective on December 31, 2007, for the purposes of calculating the legal entity´s real profit, until the new law sets the rules for the effects of such changes, seeking a fiscal neutrality, in the terms of articles 15, § 1 and 16 of Law nº 11.941/09.
In this context, the opinion assumes that a new accounting system was introduced in connection with the depreciation of items of fixed assets and, in view of the legal determination, indicates that any adjustment to be made in the legal entity’s income account because it has submitted itself to the new accounting and corporate law, must also produce an adjustment in the Taxable Income Control Register (Livro de Apuração do Lucro Real - Lalur), according to RFB Ruling Instruction nº 949/09 which governs the RTT and establishes the Transition Accounting Fiscal Control (Controle Fiscal Contábil de Transição - Fcont), so as to neutralize the tax effects of what was recorded in the legal entity´s accounting records.
(Ruling Opinion nº 1, Jul. 29.2011 / DOU-I, Aug. 09, 2011)
STF Unconstitutionality of tax benefits granted by State Law nº 11.393/00 of the State of Santa Catarina
On August 05, 2011, a decision was published in Direct Action for Unconstitutionality nº 2.345/SC in which the Federal Supreme Court judged the constitutionality of tax benefits granted by State Law nº 11.393/00 of the State of Santa Catarina, which established the cancellation of the tax notices issued based on the 1998 Declaration of Economic-Fiscal Information (Declaração de Informações Econômico-Fiscais – DIEF), and determined that the corresponding amount should be collected to the State Treasury.
The Direct Action for Unconstitutionality was filed by the Governor of the State of Santa Catarina against the House of Representatives of the State, arguing the unconstitutionality of State Law nº 11.393/00, on the grounds of violation of arts. 1, 2, 61, § 1, II, “b” and 155, § 2, XII, “g” of the Brazilian Constitution, because it would have established a tax benefit without CONFAZ’s approval. Additionally, it states that there was an initiative defect of the objected law because the draft had parliamentary initiative, something that is prohibited in tax matters, since the competence is exclusive to the governor.
As a result, the direct action for unconstitutionality was granted relief by the unanimous vote of the Plenary Session of the Federal Supreme Court that declared the unconstitutionality of State Law nº 11.393/00, since it violated Complementary Law nº 24/75 and art. 155, § 2, XII, “g” of the Brazilian Constitution, because it established a tax benefit without the execution of a CONFAZ agreement.
(ADI nº 2345/SC. Available at: <http://www.stf.jus.br/portal/principal/principal.asp>. Access on: Sep. 2011)
STF Possibility of calculating the ICMS on a gross-up basis
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A decision was published on August 17, in connection with Extraordinary Appeal nº 582.461/SP, with acknowledged general repercussion, which appreciated the possibility of the calculating the ICMS on a gross-up basis (art. 155, II, of the Brazilian Constitution, c/c arts. 2, I and 8, I, of Complementary Law nº 87/96).
The Taxpayer argued that the taxable basis of ICMS should correspond necessarily to the amount of the commercial transaction that was carried out, so that the gross-up would imply a double taxation, violating the principles of ne bis in idem (art. 155, II, of the Brazilian Constitution), of legality (art. 150, I, of the Brazilian Constitution) and of the contributing capacity (art. 150, IV, of the Brazilian Constitution).
However, the STF plenary session decided, by majority of votes, to dismiss the Taxpayer´s Extraordinary Appeal and establish STF jurisprudence with respect to the constitutionality of calculating the ICMS on a gross-up basis, since the ICMS taxable basis, defined as the amount of the operation of distribution of goods, includes the amount of the ICMS itself, because it is part of the amount paid by the buyer and received by the seller in the transaction, in the terms of art. 155, II, of the Brazilian Constitution c/c arts. 2, I and 8, I, of Complementary Law nº 87/96.
The decision also pointed out that § 1, art. 13, of Complementary Law nº 87/96 indicates that the amount of the tax itself integrates the ICMS taxable basis, and the indication of the ICMS amount in the fiscal document would serve only for control purposes.
Finally, it stated that Constitutional Amendment nº 33/01 inserted line “i” to item XII, § 2, art. 155, of the Brazilian Constitution which, by setting forth that a Complementary Law should “set the basis for calculation, so that the amount of the tax integrates it, also when importing goods or services from abroad” assumed that the ICMS was already calculated in that manner.
The votes by Justices Marco Aurélio and Celso de Mello were defeated.
(RE nº 582461/SP. Available at: <http://www.stf.jus.br/portal/principal/principal.asp>. Access on: Sep. 2011)
STF Unconstitutionality of tax benefits granted by Decree n. 26,005/2000 of the State of Rio de Janeiro
The Federal Supreme Court (Supremo Tribunal Federal – STF) has declared the unconstitutionality of a Decree of the State of Rio de Janeiro that grants ICMS benefits to imports and internal transactions.
In judgment session, the STF granted relief to Direct Action for Unconstitutionality n. 2376, filed by the Governor of the State of Minas Gerais against Decree n. 26,005/2000, issued by the State of Rio de Janeiro.
By means of Decree n. 26,005/2000 the State of Rio de Janeiro released from the payment of the ICMS, without a prior agreement, the import and intrastate acquisition of inputs, materials and pieces of equipment destined to the construction, repair, modernization, transformation and reconstruction of oil rigs and vessels used in foreign and domestic trade, in the rendering of maritime services, coastal and inland shipment and 'offshore' and port services support.
The STF granted relief to the request submitted in such lawsuit, on the grounds that Decree n. 26005/2000 was unconstitutional.
(ADI 2376/RJ. Available at: <http://www.stf.jus.br/portal/principal/principal.asp>. Access on: set. 2011)
STJ Possibility of withholding amount to be refunded/reimbursed by the Treasury when the Taxpayer expresses objection in an ex officio offsetting procedure
A decision was published on August 17, 2011, by the Superior Court of Justice (Superior Tribunal de Justiça – STJ) in the records of Direct Appeal n. 1,251,513 (repetitive), in which two issues in connection with the REFIS IV (debt term payment program established by Law n. 11,941/2009), were discussed, namely:
(i) the possibility of the taxpayer using deposits into court not yet turned into definitive payments (not converted into income to the Federation), bound to res judicata lawsuits, to settle debts using the deductions provided in Law n. 11941/2009; and (ii) if the deductions provided in Law n. 11941/2009 should be applied to interest consequent of the applicability of the SELIC Rate on the amounts deposited into court, so that the taxpayer could withdraw the remaining balance.
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With respect to issue (i), the STJ announced opinion to the effect that the deposits bound to res judicada lawsuits may be used by the taxpayer provided that the adhesion to the REFIS IV has occurred before the court order to convert such deposits into definitive payment (converted into Treasury’s income).
With respect to issue (ii), the STJ decided that the waiver of interest provided in Law nº 11941/2009 refers only to the interest that composed the tax credit when the deposit was made, and not to the interest that remunerates the court deposit.
(Direct Appeal 1251513 - PR (2011/0096857-2) / DJe, Aug. 17, 2011. Available at: <http://www.stj.jus.br/portal_stj/publicacao/engine.wsp>. Access on: Sep. 2011)
STJ New request to examine the records interrupts STJ judgment on the imposition of Income Tax on delay interest
A request to examine the records prevented the taxpayers from prevailing in the judgment by the First Section of the STJ on the imposition of Income Tax to delay interest. The judgment had already four votes favorable to the taxpayer and three votes favorable to the Tax Authority, and on that occasion, Justices Napoleão Nunes Maia Filho and Joaquim Falcão were absent. Though Justice Arnaldo Esteves Lima had already announced his vote favorable to the taxpayers, he requested to examine the records, and this prevented the announcement of the judgment result and opened the possibility of analyzing the lawsuit again with the presence of all the Justices.
In the actual case, the discussion involves the imposition of income tax to the delay interest charged due to a sentence in a labor proceeding: the Treasury argues that delay interest is an accessory sum of the main sentence and must have the same nature, therefore, the Income Tax is applicable; the taxpayer, on the other hand, believes that delay interest consists of a mere indemnification limited to recover the property of the person who failed to receive a payment at the proper time, therefore not subject to Income Tax.
(Direct Appeal 1227133 - RS (2010/0230209-8). Available at:<http://www.stj.gov.br/portal_stj/publicacao/engine.wsp>. Access on: Sep. 2011)
STJ First Section of the STJ will judge the possibility of the “actual taxpayer” questioning the applicability of the taxes
The current prevailing opinion of the STJ is that under the tax substitution system only the legal taxpayer (obliged to pay the taxes along the chain), and not the actual taxpayer (obliged to bear the tax burden), may claim the refund of amounts unduly paid and must further prove that he effectively borne the payment of the taxes or was authorized by whomever borne it to claim the rebate. The First Panel has recently decided to resume the issue, taking to its First Section the specific analysis of the possibility of the actual taxpayer discussing the validity of the taxation.
(Direct Appeal 1191860 - SC (2010/0080492-0). Available at:<http://www.stj.gov.br/portal_stj/publicacao/engine.wsp>. Access on: Sep. 2011)
STJ STJ upholds the applicability of the IRPJ and CSLL on the PIS and COFINS accumulated credits
The Second Panel of the STJ announced the opinion that the IRPJ and CSLL are imposed on accumulated PIS and COFINS credits. In the actual case, it analyzed an appeal filed by a company engaged in the exporting agribusiness industry and which discussed the taxation of presumed credits resulting from the purchase of inputs. The taxpayer used the argument that the companies in such industry accumulate a lot of PIS and COFINS credits, due to the non-cumulative nature of the taxes and to the tax releases granted to exports. However, since such credits cannot be offset or reimbursed, there is not the acquisition of legal or economic availability of any income to be taxed. In such judgment, the STJ applied prevailing opinion to the effect that the income tax on the tax credits, once the tax legislation admits reimbursement or offsetting and, as slow as the reimbursement procedure may be, the taxpayer still has the legal income availability, according to Section 43 of the Brazilian Tax Code. The appellant’s attorneys, however, argued that in the specific case of the company engaged in the exporting agribusiness industry, such opinion should not be applied, in view of the fact that there is no provision in the tax legislation contemplating the reimbursement or offsetting; therefore, there would be no legal income availability and, consequently, taxation by the IRPJ and the CSLL should be dismissed.
(Direct Appeal 1254311 - RS (2011/0110721-1). / Dje, 30.08.2011. Available at:<http://www.stj.gov.br/portal_stj/publicacao/engine.wsp>. Access on: Sep. 2011)
CARF Only the amounts paid as Interest on Equity Reserve (Juros sobre Capital Próprio – JCP) to the shareholders or partners proportionally to the shares of each in the company’s capital stock are deductible from the taxable basis of the IRPJ and CSLL
On July 29, 2011, Panel Decision nº 1301-00.480 of the 1st Ordinary Panel of the 3rd Chamber of the Administrative Board of Tax Appeals (Conselho Administrativo de Recursos Fiscais – CARF) was announced, determining that the payments made to partners or shareholders of a company as Interest on Equity Reserve (Juros sobre o Capital Próprio – JCP) (whether as credit or individual payment) must be proportional to the respective shares held in the company. Accordingly, any portion paid in excess of the amount pro rata to the partner’s or shareholder’s shares cannot be characterized as JCP, and, therefore, is not deductible from the calculation basis of IRPJ and CSLL.
(Panel Decision nº 1301-00.480 – 3rd Chamber / 1st Ordinary Panel)
CARF Amounts received as Stock Usufruct must be stated during the validity of the contract
Panel Decision nº 103 -23.658 of the 10th Panel of the Regional Judgment Office of São Paulo/SP – DRJ was published on July 29, 2011, and determined that the amounts received for an stock usufruct agreement must the stated by taxpayers during the validity of the contract executed by the parties, even if the payment takes place in a lump sum and in full.
(Panel Decision n° 103-23.658)
CARF Franchise agreement has hybrid nature and, therefore, each of its sides must be submitted to the specific rate for the purposes of assessing the IRPJ under the Presumed Profit system
On July 29, 2011, Panel Decision nº 1201-00.011 of the 2nd Panel of the Regional Judgment Office of Campinas/SP – DRJ was handed down, which acknowledged that the franchise agreement has a hybrid nature because it contemplates various activities, such as the assignment of rights and know-how, services provision, sale of goods, among others. In view of this, it did not accept the claim filed by the Tax Authorities seeking applicability of a 32% rate over the totality of the Taxpayer’s revenues consequent of the franchise agreement, making it necessary to segregate revenues from each activity to apply the corresponding percentages for assessment of IRPJ under the presumed profit system.
(Panel Decision n° 1201-00.011)
CARF Trading Company may deduct expenses with the exchange variation incurred in the course of its activities of exporting goods
On July 29, 2011, Panel Decision nº 1301-00.418 of the 1st Panel of the 3rd Chamber of the Administrative Board of Tax Appeals (Câmara do Conselho Administrativo de Recursos Fiscais – CARF) was announced, which acknowledged that the Trading Companies that acquire products in the domestic market (from a domestic producer) to export to a consortium abroad, not only perform an act typical of their corporate object, but it also obliges itself, even if by adhesion, to the agreement previously executed between the domestic producer and the consortium abroad.
In view of this, the exchange variation expenses, consequent of contractual provision, and which were incurred and effectively paid
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and proved to be necessary and usual in the activity typical of a Trading Company, are deductible expenses for the purposes of calculating the taxable basis for IRPJ purposes.
(Panel Decision nº 1301-00.418 – 3rd Chamber / 1st Ordinary Panel)
CARF The amounts in connection with freight, insurance and taxes applicable to the importation must be taken into account when calculating the price adopted by the PRL system
On July 29, 2011, Panel Decision nº 1301-00.436 of the 1st Ordinary Panel of the 3rd Chamber of the CARF was published, determining that the amounts in connection with freight and insurance that were borne by the importing taxpayer must be included in the calculation of the price adopted in the system of Resale Price less Profit (Preço de Revenda menos Lucro – PRL), as well as the taxes imposed on the import.
(Panel Decision nº 1301-00.436 – 3rd Chamber / 1st Ordinary Panel)
CARF Adding value in Brazil prevents the adoption of the 20% profit margin under the PRL method. Expenses with technical services are deductible from the IRPJ taxable basis provided that they are usual, ordinary and necessary for the company’s activities
On July 29, 2011, Panel Decision nº 1301-00.451, of the 1st Ordinary Panel of the 3rd Chamber of the Administrative Board of Tax Appeals (Conselho Administrativo de Recursos Fiscais – CARF) was published, determining the impossibility of adopting the 20% profit margin when using the method of Resale Price less Profit Margin (Preço de Revenda menos Lucro – PRL), in the cases in which there is value added to the goods in the Brazil. The issue concerning the deductibility of amounts paid as technical services from IRPJ and CSLL taxable basis was also analyzed, and it was determined that, if they prove to be usual, ordinary and necessary to perform the company’s activity, they may be considered deductible.
(Panel Decision nº 1301-00.451 – 3rd Chamber / 1st Ordinary Panel)
CARF Calculation of the Compared Independent Price with a small quantity and lack of coincidence of the periods that imply a defect of the parameter price
On July 29, 2011, Panel Decision nº 1301-00.362 of the 2nd Ordinary Panel of the 3rd Chamber of the CARF was published, which argued that the calculation of the Compared Independent Price method (Preço Independente Comparado – PIC) based on a small quantity of imported products and which lacked coincidence of the import periods implies a defect in the calculation of the adopted parameter price. It also pointed out that in the period analyzed in the decision, relevant exchange changes occurred, something that could interfere in the intended comparison when calculating the transfer pricing. Finally, it pointed out that the public administration cannot fail to apply a valid ruling instruction, under the penalty of impairing the Juridical Security and the taxpayer´s good faith.
(Panel Decision nº 1302-00.362 – 3rd Chamber / 2nd Ordinary Panel)
CARF Untimely payment of Interest on Equity Reserve must respect the deductibility limit of the year when it is distributed
On July 29, 2011 Panel Decision nº 1301-00.465, of the 2nd Ordinary Panel of the 3rd Chamber of the CARF was published, which established that the payment or not of Interest on Equity Reserve (Juros sobre Capital Próprio – JCP) is a right of the company, which may be exercised or not. However, the deductibility limits of the amounts paid as JCP must respect the legislation in force, so that the deductibility of the expense must conform to the limit of the calendar year when the payment is made.
(Panel Decision nº 1302-00.465 – 3rd Chamber / 2nd Ordinary Panel)
CARF Companies engaged in developing buildings, lot areas or real estate purchase and sale must apply an 8% percentage for the purposes of determining the taxable profits under the presumed profit system, whereas the companies that are not engaged in such activities must calculate the capital gain
On July 29, 2011 Panel Decision nº 1302-00.469 of the 2nd Ordinary Panel of the 3rd Chamber of the CARF was published, which determined that the companies engaged in developing buildings, lot areas or real estate purchase and sale must adopt the 8% rate for the purposes of determining the IRPJ taxable basis under the presumed profit. On the other hand, the companies that are not engaged in such activities are subject to calculating the capital gain when performing this type of operation.
(Panel Decision nº 1302-00.469 – 3rd Chamber / 2nd Ordinary Panel)
SUB-SECRETARY OF TAXATION AND LITIGATION. TAXATION GENERAL COORDINATION Literal Interpretation
On August 26, 2011, Divergence Solution nº 22 was published. Adopting the provision in Section 111, III, of the Brazilian Tax Code, such Divergence Solution deemed that the word “partner” in Section 120, III, of Ruling Instruction Nº971/2009, which deals with the release of social security withholding in contracts involving professional services provided personally by the partners, should not include the remunerated partner, for which reason such release would not apply in this case.
(Divergence Solution nº 22, Aug. 04.2011 / DOU-I, Aug. 26, 2011)
2nd TAX REGION Non-Applicability of the Rate Reduction – Toll agreement – Manaus Free Zone
On August 10, 2011 Enquire Solution nº 13, of the 2nd Tax Region was published. Such enquire solution stated that the reduction of the PIS and COFINS rate to zero (0) provided in article 2 of Decree 5.310 (applicable to the gross revenue obtained with the sale of raw materials, intermediary products and packing materials, produced in the Manaus Free Zone, to be used in the manufacturing process by the industrial establishment operating in that region) applies only to the products produced there, and do not apply to revenues consequent of toll services, to which the general rate defined in the legislation will apply, in the absence of a specific treatment.
(Enquire Solution nº 13, 12.07.2011 / DOU-I, Aug. 10, 2011)
2nd TAX REGION PIS and COFINS credit in the acquisition of Diesel – Ore Processing
On August 10, 2011, Enquire Solution nº 14 was published by the 2nd Tax Region. Such solution determined that in the case of PIS and COFINS credits, the acquisition of diesel oil used in machines, vehicles and equipment items employed to extract and process gold ore for selling purposes, entitle to the register of credits, provided that subject to the payment of the contributions and acquired from a legal entity domiciled in the Country. It also determined that the tax suspension provided in article 40 of Law 10.865/2004 (applicable to the sale of raw materials, intermediary products and packing materials having as destination a legal entity that is mainly an exporter), because it comprises only direct inputs, does not apply to the acquisitions of diesel oil used in machines, vehicles and equipment items used to extract and process gold ore to be sold, by a mainly exporting company.
(Enquire Solution nº 14, 28.07.2011 / DOU-I, Aug. 10, 2011)
5th TAX REGION Withholding of Income Tax and Social Security Contributions by Consortia
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On August 10, 2011 Enquire Solution nº 33 was published by the 5th Tax Region, dealing with the withholding of the Income Tax and Social Security Contributions at the source by the consortium. Firstly, the enquire solution acknowledged that the consortium is not an independent legal entity, and the contract must define the obligations and responsibilities of each consortium member, as well as the contribution of each to the common expenses. Because it is the responsibility of each consortium member to comply with the tax obligations, the consortium member in charge of hiring individuals as employees or independent workers to provide services to the consortium must withhold and collect the respective Income Tax and Social Security Contributions. Furthermore, since it is not an independent legal entity, the consortium cannot be considered as or deemed equivalent to a “company” for the purposes of compliance with the social security obligations. However, as of October 29, 2010 (pursuant to Law 12.402/2011, the result of MP nº510/2010 conversion), the consortium that hire in its own name, legal entities or individuals, with or without an employment relationship, may withhold the taxes, fulfill the respective accessory obligations and pay the social contributions under the responsibility of the employer, including the one applicable to the remuneration of spare workers and the consortium members will be jointly liable for such payment.
(Enquire Solution nº 33, 04.08. 2011 / DOU-I, Aug. 10, 2011)
6th TAX REGION REIDI Benefits – Acquisitions by consortia
On August 10, 2011 Enquire Solution nº 76 was published by the 6th Tax Region. Dealing with the applicability of the REIDI, special regime to foster infrastructure development, to the consortia, it established that these may carry out acquisitions with the suspension of the PIS and COFINS levied on goods and services for the incorporation or use in infrastructure works benefited with the REIDI, provided that the operation is carried out through the leading consortium member and all the legal entities integrating the consortium are qualified (or co-qualified) to the REIDI, with the indication of the consortium CNPJ number and its name in the qualification or coqualification Declaratory Act granted to the consortium members.
(Enquire Solution nº 76, 05.08.2011 / DOU-I, Aug. 10, 2011)
7th TAX REGION IOF/Insurance Taxpayer
On August 16, 2011, Enquire Solution nº 61 was published by the 7th Tax Region. Dealing with the applicability of the Tax on Financial Operations (Imposto sobre Operações Financeiras – IOF) to insurance operations, it decided that when paying the collective health insurance premium in favor of employees (and respective dependents) of an international organization, the latter is not a party to the legal tax relationship, therefore, the taxpayer is the insured individual and the insurance company is responsible for charging and paying the IOF.
(Enquire Solution nº 61, 22.06.2011 / DOU-I, Aug. 16, 2011)
7th TAX REGION IRRF applicable to the operations with international carriers
On August 16, 2011 Enquire Solution nº 64 was published by the 7th Tax Region. Dealing with the payment made as remuneration for international transportation services, it decided that the resfonsible for the Withholding Income Tax (Imposto de Renda Retido na Fonte – IRRF) in the operation was the effective beneficiary of the income (titleholder), that is, the one with a personal and direct relation with the situation that constitutes the tax event, being irrelevant the private agreements that define another person responsible for the payment. Such income is subject to a 15% rate, and this rate goes up to 25% in the cases in which the income is received by international carriers domiciled in a country that does not tax the income or which taxes it at a maximum rate lower than twenty per cent.
In the cases in which, by reason of domestic legislation or international agreements, the country where the international carrier is domiciled does not tax similar operations with Brazilian companies, the IRRF is not due. Finally, the Enquire Solution defined that the rate of the withholding tax applicable to freight, rent or lease revenues of sea or river vessels or foreign aircrafts, is reduced to zero, provided that approved by the competent authorities.
(Enquire Solution nº 64, 08.07.2011 / DOU-I, Aug. 16, 2011)
9th TAX REGION PIS and COFINS credits in the textile industry
On Aug. 4, 2011, Enquire Solution nº 161 was published by the 9th Tax Region. Dealing with the possibility of calculating the PIS and COFINS credits, such Enquire Solution provides that, in the regime of non-cumulative calculation, the acquisition of replacement needles in looms, as well as the fuel gas used in the knit fabric heat fixation, entitle to the credit of the contributions. However, the acquisition of wood chips, saw dust and firewood, used as fuel in the boilers that produce steam to dye the fabric, as well as the diesel oil consumed in the electric power generators, used in peak hours to keep the production operating, do not entitle to the credit of such contributions. The machines and pieces of equipment acquired in the past also entitle to the credit, provided that the statute of limitation is observed (five years not from the acquisition of the property, but from the term in which the credit could be deducted, according to the credit deduction option chosen by the taxpayer), such deduction to be made under the method chosen in accordance with the legislation in effect at the time of the acquisition of the property.
(Enquire Solution nº 161, 19.07.2011 / DOU-I, Aug. 04, 2011)