Brazil identifies R$ 745 million in improper tax credits

Brazil's Federal Revenue Service (Receita Federal) has identified R$ 745 million in improper PIS and Cofins tax credits within the vehicle dealership sector. Through 'Operação Zero Km,' authorities audited 1,176 reimbursement requests, discovering that many companies sought credits for vehicles, motorcycles, and auto parts that lacked legal basis under specific taxation regimes.

To date, the operation has resulted in the cancellation of 649 requests and the issuance of collection notices for over R$ 251 million in irregularly received funds. The audit focuses on identifying generic or improperly recorded credits in fiscal bookkeeping.

In a related legal development, the Superior Tribunal de Justiça (STJ) ruled unanimously that ICMS paid during acquisitions cannot be used to calculate PIS and Cofins credits. This binding decision, established under Theme 1,364, aligns with Law 14,592/2023 and prevents taxpayers from excluding ICMS from the tax base while simultaneously using it to increase tax credits, a move the court found maintains the coherence of the tax regime.