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Government attitudes force Brazilian taxpayers to litigate over Tax Recovery Program

Taxpayers in Brazil will hope that the superior courts continue the recent thread of favourable judgements relating to the REFIS.

 It has been more than four years since the enactment of Law No. 11.941 of May 27 2009, which:

  • established the Tax Recovery Program (REFIS);

  • granted significant reductions in the payment of tax penalties and interest, enforced by the Brazilian Internal Revenue Service; and

  • made it the possible to divide outstanding debts into up to 180 installments.

However, Brazilian Internal Revenue Service bureaucracy and consecutive attempts by the National Treasury Attorney's Office at restricting and mitigating tax benefits force taxpayers to engage in legal battles to give effect to the benefits they are expressly entitled to by law.

Particularly for taxpayers who had judicial deposits, the REFIS, which was supposed to reduce tax litigation, has not proved efficient so far.

Sparse interpretations by the Treasury Attorney’s Office and Specialised Departments of the Internal Revenue Service make it even harder to combine an applicable determination to all taxpayers. Therefore, taxpayers each have to resort to the Judicial Branch to enforce their right to tax benefits to the exact extent intended by the law.

Over the years, taxpayers enrolled in the REFIS realised that appeals filed in an attempt at restricting benefits were not one-off measures, but rather a strategy articulated by the Treasury Attorney’s Office to question the rights expressly specified by Law No 11.941/2009.

The appeals filed by the Treasury Attorney’s Office present arguments which are diametrically opposed to what is expressly stated in the legal text.

One of the great debates between taxpayers and the Treasury Attorney's Office relates to the possibility of using net operating losses and the Social Contribution on Net Income (CSLL) negative tax base for discharge of interest and penalties over debts included in the REFIS, when fully guaranteed by deposits in court.

Despite delays regarding the judiciary’s opinion about the conflicts involving the REFIS, 2013 resulted in great advances, considering the rendering of judgments ensuring benefits to taxpayers. The Brazilian Second Regional Court of Appeals gave a judgment in one of the first rulings on the matter, and confirmed the possibility of using net operating losses and the CSLL negative tax base for discharge of interest and penalties in cases in which there are deposits in court.

In the next few years we will have the final decision of the superior courts on these issues. Meanwhile, taxpayers await the resolution of conflicts and hope that all benefits guaranteed by law are put into effect.

Alessandra Gomensoro (

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