By Guilherme Martins and João Pedro Riccioppo Cerqueira Gimenes*

Last week, the Federal Government forwarded to the Chamber of Deputies, dealing with the rules regarding state tax incentives and their use by taxpayers, Bill (PL) No. 5,129/2023, prepared to replace the text of Provisional Measure No. 1,185/23 and encourage consideration of the matter by the Federal Legislature in 2023.

This measure does not differ from the revenue collection focus and the recurring changes already made by the Federal Government in 2023, in search of increased revenue collection.

The movement to vote on the Bill is a priority among the Government's agenda for the coming weeks. According to information from the Ministry of Finance itself, the Bill will correct distortions in tax payments by companies and has the potential to raise 137 billion over the next four years.

The Bill reproduced the content of Provisional Measure No. 1,185/23. The MP, published at the end of August 2023, significantly changed the tax treatment of investment subsidies. The current rules – which exempt investment subsidies from the payment of IRPJ, CSLL, PIS and COFINS – were revoked.

Now, as everything indicates that the PL will be voted on, the amounts received as investment subsidies (ICMS tax incentives/benefits) will be taxed by IRPJ, CSLL, PIS and COFINS. The difference is that an IRPJ tax credit will be generated and, in order to benefit from such credit, the taxpayer must register with the Brazilian Federal Revenue Service. After registering, the taxpayer will be able to calculate the aforementioned credit directly in the ECF (Fiscal Accounting Records) and, at the end of the procedure, it may either be reimbursed in cash or offset.

Given the many relevant changes on the subject, our team will closely monitor the progress of the Bill and is available to provide any clarifications.

(With the collaboration of Pedro Antônio GM Buzas)