Originally published in the October 2 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Responding to a general claim from small businesses under the new Super Simples simplified tax regime, Brazil’s Federal Revenue Department has agreed to allow P.I.S. (Program for Social Integration contribution) and COFINS (Contribution for the Financing of Social Security) tax credits on purchases from those companies.
Interpretative Declaratory Act (ADI) No. 15/07 was published in the official gazette on September 28. It clarifies tax authorities’ position that taxpayers (who are under the noncumulative P.I.S. and COFINS regimes) are entitled to P.I.S. and COFINS credits on their purchases from companies under the Super Simples regime. Purchases of both goods and services are eligible for the tax credit, the ADI says.
ADI 15/07 brings welcome tax relief to small businesses under the Super Simples regime, as some large companies have been demanding price reductions to compensate for the lack of tax credits. Also, because ADI is an interpretative ruling, it should have retroactive effect, entitling large purchasers to take P.I.S. and COFINS tax credits on purchases dating back to the beginning of the Super Simples regime.
David Roberto R. Soares da Silva