The Federal Revenue Service restricts the deduction of IRPJ and CSLL Tax Incentives

Recently, the Federal Revenue Service reaffirmed a position that has generated concern among companies: the restriction on the deduction of tax incentives from the calculation basis for Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL). This understanding was formalized in Consultation Solution No. 7022 and in Interpretative Declaratory Act (ADI) RFB No. 4, published on December 26, 2024.

The Federal Revenue Service’s Position

According to the IRS, ICMS tax incentives can only be considered investment subsidies—and therefore excluded from the IRPJ and CSLL tax bases—if they are granted exclusively as an incentive for the implementation or expansion of economic ventures. This interpretation, however, contradicts legal standards and established court understandings.

The Taxpayers’ View and the Legal Basis

Taxpayers argue that the restriction imposed by the Federal Revenue Service clearly violates Complementary Law No. 160/2017, which treats any ICMS tax incentives as investment subsidies, regardless of any counterparts such as expansion or implementation of projects. This legal norm seeks to provide legal certainty to taxpayers by standardizing the tax treatment of tax incentives.

Judicial and Administrative Precedents

Furthermore, the Superior Court of Justice (STJ), in a repetitive appeal (Topic 1,182), consolidated its understanding that taxpayers cannot be required to prove that tax incentives were granted to encourage the implementation or expansion of economic enterprises for the purpose of excluding them from the IRPJ and CSLL tax bases. Similarly, the Administrative Council of Tax Appeals (CARF) has repeatedly issued favorable decisions for taxpayers in cases involving investment subsidies.

Impacts for Companies

The interpretation adopted by the Federal Revenue Service could have significant impacts on companies that benefit from state tax incentives. The imposition of additional requirements to exclude these incentives from the IRPJ and CSLL calculation bases represents an increase in the tax burden that, in many cases, is not aligned with current legislation and case law.

Recommendation: Filing of Legal Measure

Given this scenario, it is recommended that companies consider filing legal action to protect their rights. Legal action not only allows them to overturn the Federal Revenue Service’s restrictive interpretation, but also avoid undue tax liabilities and recover any overpaid amounts.