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January 18, 2023

Brazilian Federal Revenue Service issues new PIS and COFINS Regulation

  • The Brazilian Federal Revenue Service has published a Normative Instruction consolidating the rules related to the calculation, collection, and supervision of the PIS and COFINS.

  • This Alert outlines the key provisions.

On 20 December 2022, the Brazilian Federal Revenue Service (RFB) published Normative Instruction RFB No. 2,121 (IN No. 2,121/22), consolidating the rules related to the calculation, collection, and supervision of the PIS and COFINS (Social Security Contributions on Sales) contributions (new regulation) and revoking Normative Instruction No. 1,911/19. It is important to note that the Laws that establish the PIS and COFINS have not changed, however, the Normative Instruction in some cases presents modifications based on the interpretation of such Laws.

The new regulation incorporates the result of controversies between taxpayers and the tax authorities and also presents the RFB’s view on certain issues, including modifying previous understanding.

The following is a summary of the main topics addressed by the new regulation:

  • Exclusion of the ICMS (State Value Added Tax (VAT)) from Calculation Bases of PIS and COFINS Contributions: the new regulation adopted the Supreme Court (STF) ruling (theme 69) and made it clear that the ICMS due (as opposed to the ICMS paid) is excluded from the PIS and COFINS calculation bases.

  • ICMS and ICMS-ST paid in the acquisition of goods and services: it was included in the legislation, an express provision in the sense that the ICMS paid in the acquisition of goods and services composes the basis for calculating the credits of PIS and COFINS contributions granted to the legal entity under the non-cumulative regime, as provided in Article 171 of the new Regulation, in line with the PGFN's (General Attorney's Office for the National Treasure) position on the subject. On the other hand, the credit on the ICMS-ST retained and collected by the tax substitute in the previous step of the chain was vetoed. In Normative Instruction 1,911 it was omitted in both cases (art. 167).

  • Exclusion of the ICMS stated in the invoice in the case of revenues not subject to PIS/COFINS: the new regulation confirms the understanding of the RFB regarding the impossibility of the taxpayer to exclude the amount corresponding to the ICMS stated in the operations whose revenue is exempted, suspended or are not subject to PIS and COFINS, a theme that has been the subject of controversy between tax authorities and taxpayer (single paragraph of art. 26 of IN No. 2.121/2022).

  • IPI paid in the acquisition: the credit on the value of the IPI paid in the acquisition of goods was vetoed, even if such tax is not recoverable to the buyer (art. 170), composing the cost of acquisition, pursuant to article 13 of Decree-Law No. 1,598/1977, which may give rise to divergent interpretations.

  • Credit in the acquisition of inputs: there is an update of the concept of inputs from the perspective of the federal revenue. According to Article 176, Section 2 of IN No. 2,121/22, the expenses with freight operations on transfers, and the packaging expenses used in the transportation of finished products, are not considered as inputs, a position that conflicts with current administrative decisions. However, it was confirmed the understanding that those expenses arising from legal requirements are considered as necessary, except for those situations in which the expenditure arises from the conclusion of contracts or collective agreement (Art. 177, IN 2.121/22).

  • Support for the adoption of different criteria for the taking of credits on fixed assets: it is now required that the legal entity that has chosen not to adopt the same criteria of calculation of credits for all fixed assets to maintain accounting records or support worksheets for each criterion used for this purpose, as provided for in Art. 188.

  • Initial term of the statute of limitations for the use of credits: the new regulation specified the initial term for the statute of limitations period for the use of PIS and COFINS credits. In the wording of the previous regulation, the initial term was the date on which the credit was constituted. Now, according to the new regulation, the statute of limitations (five years) must be counted from the first day of the month following that in which the acquisition, return or expenditure that allows the calculation of credit took place (art. 163).

  • Reintegra: the operations involving the Manaus Free Trade Zone were equated to exports (art.238), resolving the existing discussions on the subject.

  • Petrochemical naphtha and other substances used by the chemical industry: art. 370 of the new Normative Instruction regulates the latest changes promoted in art. 56 of Law 11.196/05 on the differentiated rates of PIS and COFINS to which the operations carried out by the producer or importer of petrochemical naphtha and other materials used by the chemical industries in the years 2022 to 2024 are subject to. In addition, the regulation reaffirms that this incentive ends in 2025, as provided for in Article 56 of Law No. 11,196/2005.


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

EY Assessoria Empresarial Ltda, São Paulo

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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