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The Brazilian Federal Revenue Service issues relevant PIS and COFINS regulation

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The new instructions concern the imports of goods and services

Ricardo Marletti Debatin da Silveira and Gabriel Caldiron Rezende of Machado Associados explain how the Brazilian Federal Revenue Service has issued a very important PIS and COFINS regulation, compiling one normative instruction rules from several laws.

The Brazilian Federal Revenue Service (RFB) issued Normative Instruction No. (IN) 1,911/2019, published on October 15 2019, to govern the calculation, collection, inspection, and administration of the social contributions on gross revenues (PIS and COFINS) and social contributions on imports of goods and services (PIS-Import and COFINS-Import).

It is worth noting that it is very difficult to correctly apply the PIS, COFINS, PIS-Import and COFINS-Import rules, as such taxes are governed by numerous laws and have undergone several changes over the past years, providing a set of various differentiated tax treatments depending on the taxpayer’s activity and/or the product sold or imported. 

To this effect, IN 1,911/2019 not only reproduces the wording of several laws, but also addresses matters previously addressed in 53 other normative instructions, which have since been revoked.

As a normative instruction is a regulatory act issued by the RFB, its legal goal would be to only regulate the application of a law; thus, it may neither innovate nor set forth new rules. In this regard, at a certain level, the normative instruction in matter complies with such goals, and compiles legal rules from several laws about the above-mentioned taxes, which comes as a positive development.

Also, to avoid legal controversies, IN 1,911/2019 makes important clarifications regarding the concept of inputs for the purpose of non-cumulative credits for these taxes. As previously mentioned, this remains a highly controversial matter. After a very important decision from the Superior Court of Justice – that established the legal concept of input – the RFB issued clarifications on the matter through Normative Opinion 5/2018.

In line with Normative Opinion 5/2018, IN 1,911/2019 applies a broad concept of input for credit purposes, granting more legal certainty to taxpayers, as the RFB is bound to its normative instructions. Nevertheless, IN 1,911/2019 still maintains some controversial matters on the concept of inputs, as already stated in the Normative Opinion.

Controversies aside, IN 1,911/2019 shows the Federal Government a good intention of rationalising the several complex PIS, COFINS, PIS-Import and COFINS-Import rules, and compiling them into one piece.

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