Artigos e Alertas


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The tug-of-war for calculating the PIS and Cofins

27/06/2019

The PIS and Cofins are social contributions levied on the company’s revenues and have become quite complex due to excessive rules.

There is a strong debate on what type of revenue shall be considered for calculating these taxes. One example is the not-so-recent decision of the Brazilian Supreme Federal Court (STF) about the exclusion of the VAT tax (ICMS) from the calculation basis of the PIS and Cofins, which applicability remains subject to discussions until these days.

Another revenue item subject to debate is the interest on capital (juros sobre capital próprio, or JCP), a type of remuneration paid by the companies to their shareholders as interest over the invested capital. In 2015, Decree No. 8,426 made it mandatory to include the interest on capital in the calculation basis of the PIS and Confis.

Last may, however, taxpayers were awarded with an important decision from the Administrative Council of Tax Appeals (Carf).

Carf decided not to charge PIS and Cofins on interest on capital received by a financial institution in the year of 2000 based on the argument that interest on capital is not a revenue generated directly from the company’s business and, thus, cannot be considered for the purposes of tax payment.

On the same case, Carf also decided for the exclusion from the calculation basis of the PIS and Cofins revenues generated from rentals of real estates owned by the refereed financial institution, which clearly have no relations with its core activities.

It is a good precedent for taxpayers, as it demonstrates Carf’s commitment to review these matters on a case-by-case basis to evaluate which revenues relate to the taxpayer’s core activities and which do not.

Carf’s decision, however, applies only to administrative and judicial discussing events that occurred before the year of 2015, i.e. before the enactment of Decree No. 8,426.

We will keep an eye on these discussions.

By Julia Malafaia Vituli Silva, associate at Candido Martins Advogados
tributario@candidomartins.com.br