By Mariana Martins

Published on 24.07.2019, COSIT Consultation Solution No. 231/2019 represents a less unfavorable turnaround for companies that earn revenue in the country from the export of goods and services, regardless of whether they are held for some period in a current account abroad.

Unlike the previous position, supported by COSIT Consultation Solution No. 246/2018, and as a way of ratifying the PGFN's understanding issued through PGFN Opinion 83/2019, the Tax Authorities now recognize the zero IOF rate on the export of goods and services, linking said exemption, however, to the observation, by the exporting company, of the maximum period of 750 (seven hundred and fifty) days between the contracting and settlement of the exchange transaction, as provided for in the rules of the CMN and BACEN.

Furthermore, for the effective recognition of the zero IOF rate to occur and for financial institutions to refrain from withholding the tax, it is also necessary to observe two other criteria, namely: (i) in the case of prior contracting, the maximum period between the contracting of the exchange and the shipment of the goods or the provision of the service must be 360 (three hundred and sixty) days; and (ii) the maximum period for settlement of the exchange contract must be the last business day of the 12th month following the shipment of the goods or provision of the service.

Although the deadlines established by the Federal Revenue Service for recognizing the zero IOF rate on the export of goods and services seem reasonable to us, it is emphasized that art. 15-B, item I of Decree No. 6,306/2007, which regulates the aforementioned exemption, does not even establish a time criterion for enjoying the zero tax rate.

Thus, COSIT Consultation Solution No. 231/2019, which renders the previous one ineffective and promises to reduce heated legal discussions on the matter, may still be subject to questioning by exporting companies that, for some reason, are unable to perfect the exhaustion of the export operation and the effective entry of revenues into the country within the period established by foreign exchange legislation, and it is certain that, also in this case, taxpayers would have a significant chance of success.

The Mazzucco & Mello Advogados tax team is available to provide any clarification on this matter.