Last February, the Brazilian Taxpayers Council (Conselho Administrativo de Recursos Fiscais or “CARF”) published an important precedent for Brazilian taxpayers on Social Integration Program/Contribution for the Financing of Social Security ("PIS/COFINS") credits.
Decision No. 3401-002.075 recognised the right to record PIS/COFINS credits arising from expenses related to freight on transportation of goods between establishments of the same company. This is the first decision favourable to taxpayer rendered by the administrative instance on this subject.
The majority of judges understood that Section 3, IX, of Federal Law No. 10,833/03—which provides for the possibility of taxpayers discounting PIS/COFINS credits on storage and shipping for the sale of goods—should be extended for the cases involving the transportation of goods between establishments belonging to the same company. They decided that the mentioned Article should be broadly interpreted, considering that it does not limit the credits solely to the sale transaction itself.
This is an important precedent for Brazilian taxpayers that may be raised in both administrative and judicial discussions concerning this issue. This is also line with the most recent decisions of the Administrative Council, which are enlarging the concept of inputs and the possibilities of PIS/COFINS credits. Given such more favourable decisions, it is important that Brazilian companies review and update their PIS/COFINS procedures in order to take advantage of possible opportunities.