STJ DECIDES THAT INPUTS APPLIED IN NON-TAXED PRODUCTS GENERATE IPI TAX CREDITS
The Superior Court of Justice (STJ) ruled that taxpayers are entitled to IPI tax credits on taxed purchases of inputs to be applied in the manufacturing of products not subject to the tax.
The Court already had the understanding that the legislation allows the IPI credit when the inputs are applied in the manufacturing of exempt and zero rate products. This new decision reaffirms the Court’s understanding, addressing specifically the possibility of credits in relation to the sale of non-taxed products.
BRAZILIAN FEDERAL REVENUE RELEASES UNDERSTANDING REGARDING TAXATION OF TAX CREDITS GRANTED BY JUDICIAL DECISION
The Brazilian Federal Revenue issued Formal Opinion nº 183/2021, expressing the understanding that tax credits to be recovered by taxpayers due to judicial decisions should be taxed by the Income Tax and Social Contribution on Net Profit at the time of the filing of the first claim to offset by the taxpayer, provided that the court decision does not quantify the amount to be refunded to the taxpayer.
For cases in which the court decision already establishes the amount of the tax credit, however, the understanding remains that the amounts must be submitted to taxation at the time the court decision becomes final.
Despite representing an “advance” in the traditional understanding of the Brazilian Federal Revenue, which required the taxation of the tax credit at the moment of the lawsuits’ res judicata, this understanding is still subject to challenge, as the communication of the first offset request is not sufficient to generate availability of income and may still be rejected by the tax authorities.
For that reason, many taxpayers have obtained court rulings to guarantee the right to only submit the credit to taxation when the offset is granted by the IRS.