A Provisional Measure 1.227/2024 , nicknamed “MP for Compensation” , generated great concern when published on June 4, 2024. She promised to limit the use of PIS and COFINS credits of companies, but it was short-lived, It was returned by the Senate federally on June 11, 2024.
By Faimon Coutinho, Bruna Costa and Luiz Carlos Benner
What did MP 1.227/2024 propose? The MP for Compensation aimed at revoking the hypotheses of reimbursement and compensation of presumed PIS and COFINS credits In addition to imposing Restriction on the use of credits determined under the non-cumulativity regime of the PIS and COFINS, which would now be able to be used only to offset PIS and COFINS debts, removing them from the exchange of credits administered by the Internal Revenue Service through DCOMPS. [1]
The government aimed to end the “negative taxation” of PIS and COFINS or disguised grants for taxpayers that generate accumulated credits, for a total estimated by the RFB at R$ 53.9 billion. The proposed limitations would protect public coffers by R$ 29 billion already in the current year, which would be sufficient to mitigate the losses caused by the continuation of the CPRB (Payroll Exemption) in 2024. [2]
But the MP was returned! What are the effects? Senate President Rodrigo Pacheco, through the Declaratory Act of the President of the Bureau of the National Congress n.36/2024 , partially returned MP 1.227/2004, leaving it without effect from the date of publication in relation to items III and IV of article 1, article 5 and article 6, which deal with restrictions on PIS and COFINS credits. He justified his decision because of the harmful effect on several important sectors of the economy, including agribusiness, exporters, recycling, the automotive industry, in addition to the fact that it was instituted without the demonstration of urgency and without legal predictability, since it was not discussed with society. [3]
There was already a legal dispute over MP 1,227 Before the return by the presidency of the Federal Senate, other actions were being taken to reduce the harmful impact of the measure, including Process 5005244-75.2024.4.03.6105 decided by judge Valter Antoniassi Maccarone, of the 4th Federal Court of Campinas (SP) of the Federal Court of the 3rd Region, who fought for Unconstitutionality of the immediate application of the Compensation MP , granting PIRELLI PNEUS LTDA a period of 90 days so that the company can adapt to the new rules. Thus ensuring that the principles of legal certainty (predictability) and nonagesimal precedence were respected, and also paving the way for a series of litigation or even questioning the Supreme Court. [4]
Will Registering Tax Benefits Be a New Reality? A point from the MP for Compensation that Did you survive the return and is still pending before the Federal Senate, it is It is mandatory for companies to inform the Internal Revenue Service, by electronic declaration, all the tax benefits they enjoy , under penalty of a fine of 0.5% to 1.5% of gross revenue for the period, depending on the amount determined. This aims to increase control and combat the misuse of tax incentives in the context of the “witch hunt” that is being promoted by the government, in the quest to increase tax revenues, as is already in practice in relation to PERSE, State Grants and the Good Law.
Recommendations Always follow our reports, because at this time the tax landscape is constantly changing and companies need to be aware of the news. We are available for further clarification as well as to review your company's level of adherence to tax benefit rules, prior to review by the Internal Revenue Service.
Fontes [1] BRAZIL, Federative Republic of. Provisional Measure 1.227/2024 available at URL <https://www.planalto.gov.br/ccivil_03/_Ato2023-2026/2024/Mpv/mpv1227.htm > accessed on June 12, 2024
[2] FEDERAL SENATE. News published by the Senate Agency: Pacheco cancels the effects of an excerpt from MP 1,227, which limited benefits to companies. Available at URL <https://www12.senado.leg.br/noticias/materias/2024/06/11/pacheco-cancela-efeitos-de-trecho-da-mp-1-227-que-limitava-beneficios-a-empresas > accessed on June 12, 2024
[3] FEDERAL SENATE. DECLARATORY ACT OF THE PRESIDENT OF THE BUREAU OF THE NATIONAL CONGRESS NO. 36, OF 2024. Available at URL <https://www12.senado.leg.br/noticias/arquivos/2024/06/11/ato-declaratorio-do-presidente-da-mesa-do-congresso-nacional-no-36-de-2024-2.pdf > accessed on June 12, 2024
[4] FEDERAL COURT OF THE 3RD REGION. Decision in a CIVIL SECURITY WARRANT (120) No. 5005244-75.2024.4.03.6105/4th Federal Court of Campinas. (Judge: Valter Antoniassi Maccarone) PIRELLI PNEUS LTDA x FEDERAL REVENUE DELEGATE IN CAMPINAS//SP, FEDERAL UNION — NATIONAL TREASURY. Available through the CONJUR Portal, at the URL <https://www.conjur.com.br/wp-content/uploads/2024/06/5005244-75.2024.4.03.6105-1718123938046-83875-decisao-1.pdf > accessed on June 12, 2024
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