Yellow Papers / Recovery of corporate tax credits in Brazil

In Brazil, the recovery of tax credits is a process that allows companies and taxpayers to recover the money that they have unduly paid to the tax authorities in the past, and this is something that, above all, foreign companies established in this country are unaware of. 

As we have already mentioned on other occasions, Brazil is a country known, among other things, for its complex taxation and its wide variety of taxes. Since 2015, ieTeam has had an office in São Paulo with an area specialising in these matters: Legal & Fiscal. 

This is our main line of business, through which we support our clients in matters of civil, corporate, tax and expatriation law.

Nowadays, companies in Brazil have to choose their taxation regimes, and most of them, mainly foreign ones, opt for the regime of Provecho Real ("Lucro Real" in Portuguese). This regime is mandatory for financial institutions, banks, companies with income or profits earned abroad and for companies that receive special tax benefits.

In this regime, indirect taxes (IPI, PIS, COFINS and ICMS), assume the format of non-cumulative, i.e. a format in which they are allowed to take credits and offer to taxation only the margin of a good or service. In other words, it works in a similar way to VAT. 

In the last 10 years the legislation has evolved, as well as the position of the judicial and administrative authorities, where there has been a movement that currently allows both recovering and taking credits for expenses and costs specifically related to the productive activity of the company. 

We would like to make special reference to PIS and COFINS credits, due to the fact that the Brazilian High Court has defined that companies, in addition to recovering such taxes at the previous stage, can take credits for other costs such as products or services that are essential or relevant to the company's activity. 

Thanks to the knowledge that our team of lawyers in ieTeam's São Paulo office has of the ICMS, IPI, PIS and COFINS legislation, we have helped many companies in obtaining benefits, thanks to the recovery of such tax credits, which both the companies' accountants and tax departments had failed to do.

In this sense, from ieTeam Brazil we are working to guide and update the systematic recovery of tax credits for Brazilian companies and to recover unused credits from five years ago to the present day.

These credits are studied on the basis of the company's activity and the decision whether or not to recover them is always based on immutable judicial decisions and determined by the administrative courts that regulate the tax aspects. 

Our experience tells us that many companies, despite having been audited and/or reviewed, may have additional credits to be recovered, which means an increase in available cash, as well as the modernisation of the system of tax recovery and the taking of credits for activities that are susceptible to generating tax credits.

If you are interested in learning more about this aspect, our team of lawyers in São Paulo is at your disposal. Let's talk?