Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 25, 2020
2020-5460

Brazil’s Superior Court of Justice extends Reintegra tax benefit to sales of goods destined to the Manaus Free Trade Zone

Brazil’s Superior Court of Justice (STJ) held, on 18 February 2020, that sales of goods with national origin to the Manaus Free Trade Zone (MFTZ) for consumption, industrialization or re-export abroad are considered exports that qualify for the tax benefit known as Reintegra (i.e., Special Regime for Reinstatement of Tax Amounts to Exporting Companies).

Law 12,546/2011 established Reintegra, which is a tax incentive that returns PIS/COFINS (i.e., social contributions) tax credits to exporting companies to eliminate remaining tax liabilities in the production chain and preserve the competitiveness of Brazilian export prices. The credits are calculated by applying a specific rate determined by Brazilian tax authorities. The rates varied during the past five years, but could reach as high as 2%, depending on the period.

The STJ and lower courts of justice may use this decision as a guide in future cases beginning on the date the decision is published in the Electronic Court Gazette. The decision states the following:

The tax benefit of the Special Regime for Reinstatement of Tax Amounts to Exporting Companies (Reintegra) reaches the operations related to the sale of goods of national origin to MFTZ, for consumption, industrialization or re-export abroad.

Because of this decision, companies that have sales to MFTZ and are beneficiaries of Reintegra could include the revenue of these sales in the calculation of the PIS/COFINS tax credits.

Given that this decision is not binding (but a relevant precedent), entities with sales to the MFTZ should evaluate how they might benefit from Reintegra.

For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, Rio de Janeiro
EY Assessoria Empresarial Ltda, Belo Horizonte
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2023, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct