Originally published in the April 3 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil has published Interpretative Declaratory Act 3/2007, which clarifies that P.I.S. (Program for Social Integration contribution) and COFINS (Contribution for the Financing of Social Security) tax credits generated under the noncumulative regime are not to be included in taxpayers’ gross income.
Interpretative Declaratory Act 3/2007, which clarifies the applicable tax treatment for Brazil’s P.I.S. (Program for Social Integration contribution) and COFINS (Contribution for the Financing of Social Security) tax credits for taxpayers under the noncumulative tax regime, was published in the official gazette on March 30.
According to the act, P.I.S. and COFINS tax credits generated under the noncumulative regime are not considered to be taxable income includable in taxpayers’ gross income. Instead, the credits serve solely to offset P.I.S. and COFINS liabilities.
The act also provides guidance regarding recommended accounting procedures for P.I.S. and COFINS credits. It clarifies that even if the taxpayer adopts a different accounting procedure, in no event will taxable income can be affected by the credits. Because the act is interpretative, it is retroactive
David Roberto R. Soares da Silva