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The rise of essential expenses in Brazil during the COVID-19 pandemic

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Companies have been adopting new work from home models

Tércio Chiavassa and Lívia Dias Barbieri of Pinheiro Neto explore how businesses in Brazil are evolving to remain competitive amidst the coronavirus outbreak.

One thing is certain: the crisis caused by the COVID-19 pandemic has reinforced the importance of companies investing in technology, digital platforms and IT services. Innovative solutions have become decisive for tackling the effects of COVID-19.

The social distancing measures recommended by the World Health Organization (WHO) to reduce the dissemination of the coronavirus has not only impacted the segments that require personal assistance to consumers, but also the wider economic sector in general. The exception has now become a rule, and that work, if possible, should be done remotely.

Given the need to adapt to this new scenario, many companies needed to reinvent themselves quickly. The home office, which until then was something novel, has become mandatory.

Investments in innovative solutions, IT infrastructure and digital communication have allowed companies to continue operating, and to provide their services remotely with quality and efficiency.

In addition, companies that were not in the digital market and those which did not do business online started to invest in e-commerce and digital marketing to enable the maintenance of their operations. In this regard, a study released by the coordinator of the MBA in Marketing and Digital Business Intelligence at the Getulio Vargas Foundation, André Miceli, points out that online sales and distance learning are expected to grow between 30% and 100%.

The new reality shows us that other disbursements and expenses have become essential and relevant, since companies have come to depend on these technologies to maintain the routine and continuity of their activities remotely and virtually.

In this sense, companies have been forced to invest in the development and maintenance of customised software to meet specific needs, digital communication systems, remote monitoring and management, virtual billing and payments, information security, and virtual training applications, among others. .

In spite of the fact that investments in technology are often encouraged by the government, in the current scenario, such expenditures to meet the recommendations of social distance and external changes that affect the development of business activity, cannot be considered a mere liberality, but a need to ensure business continuity.

Thus, it is pertinent to consider that expenses with technological innovations and IT infrastructures, necessary for the development of remote or virtual work, must guarantee the right to discount PIS and COFINS credits, under the terms of Article 3, item II, of the Brazilian Federal Laws Nos. 10.637/2002 and 10.833/2003, as they have become essential and relevant for the development of economic activity. It has no longer become an option for a company to work against modernisation.

At this specific point, it is important to consider that the legal imposition of measures as a result of the COVID-19 pandemic is an additional credit to the analysis of the essentiality and the relevance of spending on technological innovations and IT infrastructure to justify the determination of PIS and COFINS credits. Although, it is important that this must be realised when considering the specific case of each company, as defined by the Superior Court of Justice (STJ) in the judgment of the Anhambi case (REsp 1,221,170).

Tércio Chiavassa

T: +55 11 3247 8648


Lívia Dias Barbieri

T: +55 11 3247 6034


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